I have a corrective price for oil to 107.93. So far this morning, the price has come as close as 108.18. I'm not sure if this is close enough to say oil moves up. If 107.93 price holds with oil bouncing up the numbers say $112.45.
If this price doesn't hold this would be the ideal price to start a low risk oil short.
Either way, I'm on it.
The budget issue has to be resolved soon since the Republicans have tied the debt ceiling increase to it, and that has to be dealt with. It seems very likely that there are going to be some significant reductions in government spending which will be very $ positive.
Syria? The speculators have to be kidding. If we had a President that wasn't trying to use the spike in oil prices to advance an agenda, it would be the perfect excuse to intervene.
I'm not talking about a debt default. The odds of that happening are tiny. However, I do think that the odds are pretty high that we are going to be living with excess liquidity without a fix for a long while as well as a paralyzed congress for the 2012 budget and beyond. Just these two things alone sort of indicate to me that the dollar is going to continue to project downward and that crude/commodity price volatility is going to remain high.
A weak dollar leaves the door completely open for surging crude prices like we are seeing this year and no backstop for the ME turmoil like we are seeing move into Syria today. Not to mention 1500 gold and 48 silver. Remarkable. If the dollar could manage to strengthen then it would have a dampening effect...but I just can't see the fix right now.
Obama is a moron. He sees no magic bullet to take down oil prices. I could come up with several in a matter of minutes.
I disagree. A debt default is very $ positive. The event would literally instantaneously vaporize trillions of $'s from the world (a world that trades everything in $'s) undoing all the QE's many times over. It isn't going to happen, but if it did the $ would soar.
I feel pretty confident that the dollar will continue to decline. I wish it were different and things can change to make it different but that is the way I see it right now. We have all of this excess liquidity sloshing around right now and we have absolutely no plan on how to tighten it up without doing damage to the economy PLUS we have US companies that are busy little bees shifting money to developing economies so that they can profit from the bump they get when converting profits into deflated dollars.
I don't like the setup or odds right now. Just like the S&P commented last week...if we fail to make a reasonable budget deal for 2012 and beyond...then we have the trigger for some really ugly dollar contraction.
I look at that chart and see something that I would rather buy then sell. Lots of room to the upside, and not much more room to fall before we hit record lows. Couple that with QE ending, an overcrowded trade, and deficit reduction, and being short the $ could be very wrong in the not too distant future. Markets generally anticipate future events, so I 'm not sure why they would wait until June to factor in QE ending especially when they started factoring it in months before it was approved by the Fed.
Obama was making more noises about oil speculation Thursday. If talking about going after them doesn't work, he will be forced to actually do it. I think by then most traders had left for the weekend, but this week could be interesting. I think the first salvo was actually the Government Sachs commodity top call. Since that didn't work, I expect we will see more overt attempts to bring prices back down. As nervous as being short oil makes me, being long would scare me a lot more.
The dollar is in pitiful shape so we can't expect much help from the inventories. Give it a glance and let me know if I'm being too kind by using the word "pitiful": http://data.cnbc.com/quotes/.DXY/tab/2
I really don't see any letup in sight until "maybe" after the QE ends in June. With the right set of geopolitical news we could possibly see 130/bbl without even breaking a sweat...and there is no dollar backstop that would slow the train down.
Somebody is because gasoline demand dropped again this week. I think that is 7 or 8 straight weeks now. Not sure what to make of the inventory #'s that keep going down as well. Price up, demand down (makes sense so far), and inventories down???? WTF???
I'm surprised that nobody is howling about it. Nobody that I associate with is having discussions about curtailing their driving due to the price of gas. Nobody. I'm beginning to wonder if $5 would be the mark.