Crude oil staged another incredible comeback as expiration seemed so far away and signs of OPEC compliance are better than expected. Should oil worry about the slowing global economy and another bank failure or should it get caught up in the commodity as a safe haven mentality that seems to be creeping back into the market place.
Oil seemed to gather steam after a report with preliminary estimates from consultant PetroLogistics Ltd. showed that OPEC might actually be well on their way to complying with their greed upon production cuts. I do not know what this world is coming too when you can't even trust OPEC to cheat but it underscores the fear that the cartel has over the collapsing world economy as well as the collapsing price of oil. The sad thing is that the reason compliance is so good is probably because no one wants to buy as much oil in the first place. It was reported by Petro-logistics that oil supply from 11 members of the Organization of Petroleum Exporting Countries subject to quotas will average 26.15 million barrels a day in January, 1.5 million barrels less than in December. OPEC won't matter anytime soon unless the market believes that demand will recover.
Oil also found inner strength when the stock market rebounded on promises or more economic stimulus. Yet oil also railed because it was hard to ignore that the gold market was soaring. It seems that the safe haven money is leaving the overbought treasury market and running back to gold. Is the gold move a sign that the market believes that the current stimulus plan will feed rapid inflation in the global market? Are we moving away from the fears of deflation back to hyper inflation mode?
Whatever the truth is, we have to respect what the market is trying to do and if oil closes above $50.00, it may be time to start planning for an oil bottom and perhaps dare I say, a new bull run.
Still we haven't confirmed anything yet and fundamentals are changing fast. Keep up with the latest by watching me every day on the Fox Business Network. Also call me for option strategies and for day trade opportunities. Just call me at 800-935-6487 or email me at email@example.com to open your account.
We're still short March crude from apprx 4354 on what is now a quadruple rollover! Stop 5350!
Sell March heating oil at 15500 - stop 15700.
Sell March RBOB at 12500 - stop 12700.
Sell March natural gas at 550 - stop 590.