Monday March 17, 2008
Crude oil started dipping overnight and continued the drop from 111 to 106.9 where it briefly consolidated for about 15-20 min before continuing the plunge to 105. Price then rose to 108.8 during midday (with a downward sloping consolidation between 107.5 and 106.2 over about 35 minutes). After achieving a local peak at 108.8 it began a decline to 103.2 (with another downward sloping consolidation between 106.5 and 105.5 over about 45minutes). A late day rally (1 hour before market close) ended with price at 106.2. Prices were up slightly in after hours trading (perhaps driven by speculation ahead of fed’s meeting today and possible decision to lower rates by 100 basis points as well as weaker dollar) but have since declined slightly to 107.3 as of 1030am.
Events were driven early on Monday by poor economic news from the US including a larger than expected decline in the empire manufacturing index- The NY "Empire" Index is one of the timeliest indicators and suggests that the manufacturing sectors is sliding into poor territory, a larger than expected decline in Industrial Production and the Capacity Utilization rate.
Also, the Bear Stearns collapse raised tensions that an economic slowdown (financials were all down) will curb
3 comments:
I appreciate your input; however it is wrong to an extent. The recent run-up in crude oil is demand driven. And yes, the dip from 100-86 was INPART do to data that pointed to an economic slowdown. That move was exacerbated by profit takers. Moreover, if you study the charts, we are buying the dips and selling the rips at these high levels-Meaning that we are comfortable with 100+ oil. And if you look at the fundamentals, demand is increasing even at these prices, while supply is tightening. And with regards to the dollar-as long as the ECB allows the Fed to do all the heavy lifting the dollar will be weak-in the short term. I do see the dollar stronger towards the 3rd quarter. But in the interim points to higher prices. But nice try..
Moreover, the recent dip from 112-106 was fund raising. It simply was institutions trying to raise money to pay margins on their failing securities. The easiest way to do that is to sell assets with intrinsic value.
What is your outlook on gold, just as bullish?
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