Oil and Natural Gas Due for a Pullback?

Oil and natural gas have both moved into extreme overbought territory (more than 2 standard deviations above their 50-day moving averages) in the past couple of days.

While the long-term uptrends are still in place, a short-term pullback is expected.

Comments

[maher:]

I agree wholeheartedly. Oil has room to fall off to AT LEAST under $100 short term, if not below $90. Do you concur?

2008 Apr 23 02:24 PM

[writer:]

or they're entering a steeper channel

2008 Apr 23 04:11 PM

[zenalgorithm:]

At $4/gallon here on the west coast, I don't even want to leave the house. Demand for gas is dropping, but oil keeps climbing, something's going to give soon. Refinery utilization is only 82% right now...some refiners are losing money and are purposely producing less...

The fickle guys on CNBC Fast Money said "Do not short oil" on Monday. But today they seemed to agree with a commodities trader that all commodities are starting to show some weakness.

2008 Apr 23 10:26 PM

[Ames Tiedeman:]

The pullback is coming. We will pull back and then go way, way up to 150 in 18-24 months. Demand is up and supply from countries like Mexico is in decline. The North Sea is in decline. China is adding 30,000 cars a month. This figure will grow to 100,000 a month within 5 years.

2008 Apr 23 10:35 PM

[Ames Tiedeman:]

I think we turn back toward 100. The pullback will be short and fast. Then we go back up. This summer we go over 120.00.

2008 Apr 24 06:45 AM

[maher:]

Nope, no steeper channel - We're going down: This Thursday April 24th AM down almost -$3 in crude

2008 Apr 24 09:59 AM

[whisperonth...:]

Up, up, and away!

2008 Apr 24 02:39 PM

[maher:]

Ames - I agree - Except that we may penetrate 100 briefly and then bounce back above it to set the stage for later rallies.

Iran/Syria war may be in the near horizon as well. And Hormuz Straits trouble will mean a total numero 6 (150) oil price in a mater of days or weeks after the "event".

2008 Apr 24 03:18 PM

[maher:]

"Iran/Syria War" meaning Israel and/or US attacking Syria and/or Iran.

2008 Apr 24 03:19 PM

[Jack Yetiv:]

Some people think of oil like all other commodities that are subject to bubbles--and then subject to "crashing"--eg, overbought housing.

But oil is different. Its price can be TOTALLY controlled by OPEC. If Saudi Arabia decided it wanted oil to go to $150 tomorrow and never go back, it could achieve that. How many millions of decreased production from Saudi Arabia would it take to spike oil to $150 tomorrow? 2 million barrells? 5? 8? I don't know, but my guess is 2-3 million barrell cutback by Saudi Arabia would do it.

In my article a few months ago, I believed that OPEC would not want to kill the golden goose and that they would open up the spigots if oil; got to $120. That does not seem to be the case.

If our demand decreases and nobody else took up the slack (which they would), OPEC could easily lower production to generate whatever price they wanted, up to $150, and maybe even more.

Jack

2008 Apr 24 05:34 PM

[Ames Tiedeman:]

Did you all see DUG today and USO? Awesome moves have started. Ticker OIL as well on the Short side...

2008 Apr 24 07:21 PM

[Tomas T:]

I agree with the pullback, something's got to give soon. Pullback is due, even that Oil is still Favored sector. In general the price of oil will never be the same, people can just forget for 1 or 2 bucks per gallon, this is history. Chances are that there is going to be a pullback and then pirces will sky rocket again.

2008 May 15 09:32 AM

[Tomas T:]

Check ticker GAZ, I did very well for the past 2 weeks (10% +), (from user 193917)

2008 May 15 10:40 AM

[LA:]

UNG and GAZ have been walking hand in hand, but UNG has much better liquidity.
3M average volume on GAZ is about $1.5M vs. UNG $65M.


On May 15 10:40 AM Tomas T wrote:

> Check ticker GAZ, I did very well for the past 2 weeks (10% +), (from
> user 193917)

2008 May 15 06:50 PM