True North_

Oil: Is It a Bullish Rally or a Sucker's Rally?

As always, much depends on your time horizon. Given the near term economic outlook, and substantial stocks of oil at hand (though that at least abated somewhat this week, with a net drop of some 4.7 million barrels - though there is still 44 million barrels more in storage now than a year ago), there is a strong possibility that oil will be pressured lower in the next few months. If that happens, it probably should be viewed as a buying opportunity. Excess production capacity remains surprisingly tight - as much as anything, I expect, because non-OPEC supplies/capacity are not being replaced or brought on as quickly as before. The EIA estimates that there is about 4 million bbl / day of excess capacity. If / when the US and European economies recover, I expect that will be used up quite quickly. See: tonto.eia.doe.gov/oog/....