Traders have settled on roughly $70 a barrel as the appropriate price for oil, which is available in massive quantities today but is expected to become more scarce as the world economy recovers and demand picks up. So when oil prices neared 73 a barrel on Friday, support gave way and futures quickly retreated.
It's a pattern that's repeated on a loop since June: oil prices have fallen sharply soon after approaching 75 dollars a barrel, and usually rally almost immediately after nearing 65 dollars a barrel. Events have largely reinforced the status quo throughout - economic indicators like the U.S. unemployment rate are worsening at a slower rate or beginning to improve, while supplies of oil and fuel remain well above normal.
The tight trading range could persist for some time - the U.S. Department of Energy and other leading forecasters say it could take until the end of 2010, or later, for refiners to burn off the surplus.
"We're not going to use all this oil in the short term," said Phil Flynn, an analyst with PFGBest in Chicago. "It's going to keep a lid on the market."
Goldman Sachs Group Inc. (GS) sees a quicker end to the glut, with supplies in the developed world reaching normal levels by the end of the year, potentially pushing oil prices up to 85 a barrel, the bank's London-based analysts wrote in a note to clients.
It was a quiet trading day for me as I only monitored my structural trading positions and did some research through out the day. As you know I am still short Dax and 3 Month Euribor Futures and I still hold some positions on Hecla MIning and on Dynegy that I plan to sell tomorrow. I think its time to fully commit to the short side of the stock market.
I am watching the US Open final on TV as we speak. The match is on the forth set and Del Potro is threatning to send the match to a fifth set.
Oil Trader`s Blog is a website for active online futures and stock traders. I will provide my real time trading decisions and my market thoughts on this webpage.
0 Comments:
