Tmalan

Options Trader: Friday Outlook

There has been considerable demand destruction already in the US. There will continue to be more in the US and other countries. None of this seems to weigh enough against a virtual threat from the Middle East.

The Axis of oil have the ability to control supply. As demand continues to drop, they can enviably produce less to keep inventory tight. How would anyone know the difference in taking less out of an oil field in order to control what is taken out vs the oil field going towards the end of the fields capacity? Who oversees this? Are they allowed to go into countries like Iran and do oil field checks?

There is too much uncertainty in the market and it is being driven by fear not facts. Yes, I do agree that demand has increased and will continue to increase provided the price comes back down to earth. However, the supply side is the uncertain variable with what seems like unlimited opinions on the subject.

This is why opening up the SPR and increasing the dollar with a rate increase will diffuse the fear and bring back stability to the market. I also agree that this should preclude opening up more offshore/Alaskan drilling for future supply streams.

The combination of these elements would remove the fear, remove incentives for propaganda, and remove the index long calendar investor who no longer would see the potential for profit.

Normal speculators then could come back into the picture and perform their normal futures trading to hedge on normal trade price fluctuations.