silverwood

Time for the 'Commodities Contrarian Contango' with Precious Metals and Energy

Marc, all your proposed pricings are very plausible considering we have embarked on the Zimbabwe style monetary policies. In the mean- time all the market managers are working overtime to create the smokescreen.

Surprising Upturn for the Energy Sector

Yes I agree with the author's logic of selling into strenght and buying back on weakness. I own a basket of the various Canroys that trade on the NYSE and they have made substantial moves. Many of them have overbought chart patterns and it is looking like a good time to take some profits.

Non-Opec Oil Production Has Peaked

Gregor Macdonald says...
"In case you do in fact run into your old Econ professor, I’d like to give readers a simple way to talk about non-OPEC supply. The next time you’re talking oil with friends and family, hit ‘em with this: For six years non-OPEC supply was flat, around 40+ Mb/day. This even though prices rose from 30.00 to 150.00. In fact, without Russia, non-OPEC supply would have fallen. What happened is that the legacy cheap oil was increasingly replaced by newer, harder, expensive oil. And now that the price has crashed back down to levels where we began the whole journey? The legacy cheap oil is depleted. The current oil was built upon much higher prices. So, just as you would expect, non-OPEC supply is on a crash course."

Seems that fundamentals like this are ignored in todays markets. Big players chase momentum whichever direction. Markets are more like a casino than a place where a business can hedge and plan expenses.

Oil: Our Biggest Ally

Although it is nice to save money at the gas pump, falling oil price is derived from trader's perceptions. One of these perceptions unfortunately is falling demand due to a collapse in world business activity. This may have consequence that will give us little to cheer about down the road. Personally I hope these traders are incorrect and that falling oil price has more to do with the pendulum of price discovery being over done now on the downside by the likes of fund managers who love to chase momentum.

Iraq Production, Conservation Could Keep Oil Price in Check for Years

"Iraq Production, Conservation Could Keep Oil Price in Check for Years"
The operative word in the above statement is COULD. The price of oil has another variable that the author has failed to mention. I agree with the author on some of his analysis of oil fundamentals, but he fails to mention the $US role in the equation. Oil is priced in $US globally. The strength of the dollar will have an influence on the oil price. Just overlay a chart of USO with USDX and you will se what I'm getting at.

The Oil Price Conundrum

When I look at the price movement of oil on a three year weekly chart. What stands out is the unsustainable rise in price immediately followed by an equally unsustainable fall in price. In his slide presentation Matt Simmons eludes to a disconnect between the paper oil barrel price and the wet oil barrel price. Prices can be influenced by perceptions real or imagined and are not wholly aligned with the fundamental picture. We see a similiar situation occuring in the precious metals markets. I see oil moving back up in search of the real fundamental price level.