If you have followed where oil has gone over the last couple of years as I have, you can forget all the charts, fundamentals, jug handles, elbows, candles etc.
Oil is all about emotion and price fixing
Oil going down to $75 a while ago was because the financial sky was falling in and everyone bailed out. The hedgies all lost a ton of money and had to get it back. It climbed back up towards $100 but there is only so far it can go without the support of growing economies or threat of supply due to war.
I bought 900 DTO shares at $38.6 last week.
Look at the reasons why WTI should have gone up today
China announced a $900bn stimulus package
The Euro went up slightly
The main refinery in Venezuala is on fire and out of action.
There's a hurricane and refineries and rigs have closed down.
Continued Israel/Iran military threats
The pipeline reversal from Cushing to the Gulf is in full flow
That's pretty major stuff and the overnight rise of $1.20 actually seemed good compared to the bad news out there.
But we are now down $1.20 a barrel. It doesn't make sense. Remember when even a slight 2 day leak in a minor US oil pipeline would cause a price spike? But it also didn't make sense to have oil go up 30% even though there was a continuing Euro crisis, China was cancelling oil delivery shipping contracts, the world was in economic reverse, unemployment was still high, stockpiles were at record highs, the Euro was falling etc etc.
In short, don't base any of your trades on anything but the "feeling" that oil traders want the price to go up or down. Lawmakers are talking about WTI being as manipulated as Libor, so those traders DO NOT want any government interference and $100 a barrel oil with 2 months before the election would make them an easy target for either candidate. No candidate is going to implement policies which drive up the price of oil. There may be some point where the shillers on CNBC ask the refiners and oil companies why gas is $4 here yet there are record stockpiles and gasoline refineries are restarting but making oil for export, not for the US. The US energy policy should be set so that Crude and distillate production satisfy the home market first, not export to keep the price high. We need a high gasoline export duty on exports once the WTI price hits over say $80 a barrel or some other punitive measure that means our US resource benefits us, the US consumers, not just the oil companies.
QE3 is not likely to be huge. Unemployment is still high, global economies are stalling and Europe will unravel at some point, strengthening the dollar and weakening US exports/European prosperity even further.
I think Oil will drop to $92 , bounce around a bit and then to $85, which is where OPEC says WTI should be anyway.
After the election is a different matter but I repeat, trade on the mood, not the fundamentals.