Why Oil Prices Are Low And Staying That Way

|
 |  Includes: OIL, USO
by: Philip Davis

No one really cares about the price of oil - it's gasoline that drives consumer sentiment.

I think oil is suffering from the stuffed strip at the NYMEX, the supply glut, the lack of demand and the fact that Iran's entire production is off-line and it's having no affect whatsoever on the global markets. So now the supply cushion is known to be much more than was previously stated and it's going to be much harder, going forward, to panic prices higher when a 150Kbd Nigerian pipeline goes down for a few days.

Click for
Chart
Current Session Prior Day Opt's
Open High Low Last Time Set Chg Vol Set Op Int
Nov'12 91.51 91.71 89.01 89.40 12:26
Oct 05
- -2.31 176301 91.71 272776 Call Put
Dec'12 91.86 92.05 89.38 89.79 12:26
Oct 05
- -2.28 52324 92.07 234265 Call Put
Jan'13 92.31 92.41 89.87 90.15 12:26
Oct 05
- -2.33 17108 92.48 118905 Call Put
Feb'13 92.63 92.69 90.26 90.68 12:26
Oct 05
- -2.22 11493 92.90 71538 Call Put
Click to enlarge

620M barrels on order in the front 3 months a LOT of open contracts, especially when you have this to look forward to:

Dec'14 90.24 90.30 89.05 89.05 12:26
Oct 05
- -1.45 2291 90.50 91043 Call Put
Click to enlarge
Dec'15 88.50 88.50 87.00 87.00 12:18
Oct 05
- -1.42 427 88.42 42319 Call Put
Click to enlarge

Disclosure: I am long USO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Positions as indicated but subject to change - we play oil in both directions, using the channel from $89.50 to $93.50 as a guide currently.