On the topic of oil prices we're thinking down then up but we've been thinking that for a year. From our March 29, 2014 post:
Barron's Cover: "Here Comes $75 Oil"
There is a lot of the stuff sloshing around.From CNBC:
Throw in the geopolitical angles (US/EU v. Russia; Saudia v. Persia) and a bit of downside protection may be in order.
Plus, we've been calling for it since $106-107, seven months ago and frankly I'm getting tired of the répétition, know what I'm sayin'?
Apparently contradicting the 'sloshing around' statement is the forward curve for WTI, currently in pretty steep backwardation from May 2014 at $101.67 to June 2016 at $84.73. That's a simplistic view however and does not account for above ground oil entangled in financing deals (Hi Izzy) and in situ storage. Remember July 4, 2008?
Oil began its historic decline from the previous day's all time high with the curve backwardated....
The strength in oil prices may not be terribly long-lasting.The July futures settled in regular trade at $102.72 and were up a bit overnight.
That's the broad takeaway from technical analysis provided by Carley Garner, author of "A Trader's First Book on Commodities."
Although Jim Cramer is first and foremost a fundamental investor, he often turns to technical analysis for insights, especially when an analyst has an impressive track record.
And Cramer says few analysts have been more accurate than Garner. "So, when Garner says to be cautious about crude, I take her seriously."
Part of Garner's skepticism involves geopolitical events, which often drive prices higher as investors fear a supply shortage. And at the moment, she believes that the price of oil has been buoyed by violence in Libya as well as the sabre rattling in Russia.
Developments attracted buyers of crude oil as they often do. However, this time, they attracted way too many of them....MORE
