A cut in oil production by the A-rabs is an increase in the price of the raw material, which squeezes oil companies you're betting here in DIG can pass that higher cost onto joe, and hike gas prices.
NOT HAPPENING for at least a year. The oil companies can't pass on to joesixpac who is losing his job, and economy ground to a halt because banks aren't lending to each other or the businesses that hire joe, so the demand for refined oil for homes and cars is declining in the nation responsible for 60% of the gas utilization of the world.
China and India were exploding, but they are into mopeds and tiny 40 MPG gas burners at 10% US capacity, they may hold their own, but they can't by themselves right now pick up the slack.
With refineries, which is what you're betting on, being squeezed by OPEC next week, and joe turning away from 18 MPG SUV's and taking the 42 MPG Corolla, it's a double whammy for DIG.
The current oil price reflect 4 discounts;
1) $10 republican election efforts
2) $10 moderate weather in October
3) $5 drop in driving due to end of summer driving season
4) $10 OPEC over supply
All these disappear by the first week of November.
Think 105 by Thanks giving.
You forgot to add the $40 strong dollar discount. With the exception of about three other people, I think the entire world is expecting oil to keep going down. To $50, $40, $30, $20... Everyone thinks that oil is done. Shot its load. Over. But it's not dead, it's just resting. Contrarians should be sitting up and taking notice right about now.
The month of october marks the point where the air conditioning and heating both take a break due to moderate weather in the N. hemisphere. Oil consumption takes a dive as the end of summer driving season adds to the above factors.
The first blast of the cold air and the holiday season movements ignite the idling refineries and recession or no recession, the quest for survival from the harsh weather takes over.
Oil back to $90 by thanks giving is granted. If DIG thrives on refineries, look for $60s.
So oil goes up by Thanksgiving, huh? Really! I guess this chart for DIG which depicts the summer as the time folks load up with oil and the stock soars, is totally wrong!
What do I know? What does DIG know? You got the winter all pegged out!