Tuesday, March 18, 2008
Where to put your money…
The crude run is far from over. The crude supply/demand fundamentals point to sustained high prices. Crude oil supply is down 4% from a year ago, and we are experiencing a relentless increase in the demand for crude oil and its related products. Furthermore, in this day and age the growing geo-political risk adds to the upward price pressures i.e. Iran, Iraq, Nigeria, and Venezuela. Then you have the speculative interest in crude oil. It has almost become a safe haven, an inflationary hedge. And with the impending interest rate cuts, which puts downward pressure on the $, look for a run-up in crude oil and related products. Moreover, look for a run-up in traditional inflationary hedges such as Gold. In times of uncertainty people tend to invest in tangible assets such as these.
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7 comments:
Well said Eric, however their is always a concern that in the short term prices may dip fairly suddenly such as when oil first reached 100 and then fell to 86 in the first 20 days or so of 2008. That drop was triggered by a string of poor economic news coming out of the US and speculation that this will lead to a drop in demand. However, it is hard to believe that this current rally will end without a corresponding rise in the dollar unless some very brutal economic news comes out.
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..
Hopefully there will be a dip in the price because of the seasonal decrease in demand. Also the Iraq war has taken a turn for the better after "The Surge" so maybe stability in that region will also drive the prices down somewhat. All I know is I'm buying if it ever dips below 100
Unlikely oil will fall below 100 again just because it was such a strong resistance level and will probably now act just as strongly as support. I definitely think a buy right above 100 would be a boss-like move, if it ever falls back down that low.
good call on the oil Erik (that's sarcasm btw). But nice try..
Do you even know why it moved the way it did..? have you ever heard of volatility..? thats sarcasm mixed with pitty.. btw
that was mean.. my appologies
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