Nikola

The Boons and Banes of Oil ETNs

>So I decided to buy some shares of DXO at $2.40 and wait it out ..when
>oil start to raise then I should make some nice profits on DXO. I think
>DXO can easily hit $10-$15 level by next year (if oil hits $60-$80 level)

DXO is 1.8 now. For it to hit $10 it would have to go up around 500%, which means oil would go up about 250%. Oil is at $35 now. That's oil above $100. In your dreams.

DXO suffers not just from contango but from being leveraged as well. They get you on the front, and then they rip on you on the back.

Stay away from DXO.

Oil will not go above $50 for another two years because of fallen demand. OPEC will cut, but that will be just enough to prevent a total price collapse to $10. Think $20s.

Short of some sort of war in the middle east. But Obama is not Bush.

Halliburton: Oil Prices May Depend on Russia

It will be Groundhog Day all over again. We never learn. If we did, we would not have recessions every few years.

The best chance for alternative energy was blown with subprime and derivatives. Oil has to stay above $100 for a few years for the investment into alternatives to really kick in.

Now oil is at $40 mainly because demand is down. Once we get out of this mess (not so quick, but eventually), there will be demand for energy but not usable alternatives. And so people will use oil again. And oil will go up again.

In the mean time, do you see anyone screaming for solar and wind? No, it only happens when oil is expensive.