BrotherMaynard

Is Oil Going the Wrong Way, Or Do We Need to Adjust Our Perceptions?

i would be scared to death to do anything other than follow the trend with tight stops. this oil market makes no sense. fundamental/technical drivers seem to always be ex-post. no positions.

Fundamentals Don't Support Oil at $55-60 a Barrel

The dollar has nothing to do with oil. Read feldstein's piece (its short and to the point):

www.nber.org/feldstein...


I'll even use a simple example...i denominate the value of my shoes in dollars. Now when the dollar falls in value, that means that my shoes go up in price? No.

A commodity, such as oil, is an object with no future cash flows...so you can substitute most anything in that example (hats, ipods, underwear, you name it).

the dollar/oil meme needs to die. notice that the $/oil correlation was nonexistent during the 90's and prior to exempt commercial markets, which today trade huge chunks of daily volume. that's not a coincidence.

Fundamentals Don't Support Oil at $55-60 a Barrel

nice article. good luck w/ that position, btw.

just to add to the speculation debate, last wednesday, the new CFTC Chairman, Michael Dunn, was quoted (link below):

"We were told to look at significant price discovery contracts and we have been doing that,"...noting that preliminary reports suggest "it was much larger than we originally thought" and that staff was "surprised" by the preliminary findings."

This, in no uncertain terms, is Dunn admitting that ICE contracts did in fact have an effect on oil prices...this, in direct contrast to what the CFTC reportedly this time last year. Funny how that works.

Link: www.easybourse.com/bou...

Oil at $50/bbl: Where to from Here?

"why oil is not at $30/bbl or below? Because the general mood is that the economy is bottoming out, we will soon see recovery and then"

You are making an eggregiously wrong assumption by saying this. "mood" implies that there is some sort of future discounting happening at spot prices. but that's impossible. there are no future cash flow in spot prices to discount. i don't know why this equity mentality continues to show itself in commodities. equities and commodities are apples and oranges. if you don't understand that, you shouldn't be talking about oil as if you do.

you need to go back an reformulate your entire argument based upon the fact that there are no future cash flows in spot prices and therefore no such thing as future assumptions in spot prices.