Oil neared $123/barrel today in trading – amazing! Actually no it is not. It was predicted by most people who know this subject. So why are we still amazed?
I have this weird feeling though, with oil rising quickly starting late last week, and now with the compounding articles, that oil will have a fast short term run up. What does that mean? It may mean an opportunity to trade. Oil could run up another 15% then correct. I of course, can’t know this for sure, but oil is breaking out from what technicians call a ‘base,’ and 20% is a reasonable run from a good base.
Interestingly, after a brief correction, most natural resources are rallying – oil, silver, food commodities. Oil may rise another 15% then very well correct 20-25% (meanwhile,the long term view is up view in my opinion).
Let’s watch this ride – what is interesting is that gas prices were not rising as fast as oil has in the past couple of years (refiners have been seeing lower margins) – however, gasoline prices are rising now. I saw premium prices at $3.75/gallon today. Won’t it be amusing to see all the 4×4 drivers staying home? As a matter of fact, my next post may be titled, “Adam Smith, The Environmentalist’s Greatest Friend.”
As an aside, I have stressed to my clients that they personally need to be energy independent, and stop worrying about the USA being energy independent. Start at home because further inflation is coming to everything you spend on – water, heat, electricity, etc! This oil spike will give you a taste of what it’s going to be like next year and beyond. Heed this lesson well!
Editor’s note: This AP press release came out 6.6.08 concerning an analyst prediction of $150 oil spike over the summer: POST