Oil Market Update (February 26, 2009)
After falling from last summer's peak of $146/barrel, oil has consolidated in the $35-$40/barrel range for several months and appears poised for a short-term rally--possibly a significant one.
Astute reader Dave D. recently requested a technical update on the oil market. He mentioned this entry from last September: Checking In on Oil's Head-Fake (September 18, 2008), and once again I asked frequent contributor Harun I. for some charts and commentary.
Chart 3.Thank you, Harun. My crude takeaway (pun intended) is that despite horrifically nregative news on the global economy, oil refuses to drop below the $35-$40 range and it held a triple bottom--technically quite significant. The fact that Large Traders are holding net long positions tells me the smart money is expecting oil to rise.
Also, note how oil is bouncing off the lower channel. The last time it hit the bottom channel line in late 2001, the price popped dramatically soon thereafter.
Despite the technical headwinds, the price has built a decent trading range base. Given the RSI indicator is diverging and the ROC is in oversold territory, then a short-term rally looks possible and perhaps overdue.
In full disclosure, I have been long APC and VLO during this consolidation and am adding some May calls (options) in anticipation of a significant short-term rally. Please read the HUGE GIANT BIG FAT DISCLAIMER below; this is NOT trading advice, it is only a disclosure of my trading positions.
Books of interest mentioned this week:
Collapse: How Societies Choose to Fail or Succeed
The Collapse of Complex Societies
Fruitless Fall: The Collapse of the Honey Bee and the Coming Agricultural Crisis
The Coming Economic Collapse: How You Can Thrive When Oil Costs $200 a Barrel
Reinventing Collapse: The Soviet Example and American Prospects
Shameless pitch for my own book: Weblogs & New Media: Marketing in Crisis
What's for dinner at your house? has been updated with two new recipes:
Quick Easy Vegetable Soup and Pork Butt Stew.
Chris Sullins' "Strategic Action Thriller" is fiction, and on occasion contains graphic combat scenes.
"This guy is THE leading visionary on reality.
He routinely discusses things which no one else has talked about, yet,
turn out to be quite relevant months later."
NOTE: contributions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
Or send him coins, stamps or quatloos via mail--please request P.O. Box address.
Your readership is greatly appreciated with or without a donation.
For more on this subject and a wide array of other topics, please visit
All content, HTML coding, format design, design elements and images copyright © 2009 Charles Hugh Smith, All rights reserved in all media, unless otherwise credited or noted.
I would be honored if you linked this wEssay to your site, or printed a copy for your own use.
|consulting||blog fiction/novels articles my hidden history books/films what's for dinner||home email me|