Friday, July 07, 2006

The Oil Roller-Coaster

I've been saying for some time now that the so called "oil shock" going on right now is likely to jerk up and down but there are not sufficient fundamentals to cause a REAL oil shock.

Two weeks ago the weekly reserves report showed a surprise drop of 3.3 million barrels and oil shot up to new record highs. Then earlier this week in my market look ahead I said "I would not be surprised to see the reserves strengthen this week" and guess what? Sure enough the reserves were up 700,000 barrels. Oil is still up though, on speculation and concerns about Iran.

My thoughts on the direction of oil remain the same as in this write-up I posted May 21st. Unless we get war in Iran or agressive action by OPEC (both items that dramatically reduce supply instead of just increasing demand) I still believe my previous appraisal is true.

I'm starting to wish I traded commodities instead of just stocks... We're something like 4:0 on this site in successfully predicting oil action in my weekly previews.
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