Sunday, April 19, 2015

Update on oil

Oil has broken out of its bottoming trading pattern. It is now trading above its past resistance level of $53 or so. In fact, it rocketed through that resistance level and now we’re taking about $60.00 oil soon!
But don’t throw all caution into to wind yet. Refineries are past their maintenance season and preparing for June’s driving season by producing loads of gasoline.  In the meantime, North American shale oil production shows signs of falling off. But don’t forget that the short sellers of oil and their bearish option trading cousins were caught with their pants down when options expired last Friday. There was a short squeeze on April 17.  Also, we still don’t know how much of the oil price is manipulated in an economic war with Russia.   Low energy prices and natural gas exports from the U.S. have not been good for Mr. Putin and collaterally damaged Venezuela.
Still, it looks like we have turned a corner and as such, the alarming claims of a crashing Alberta Economy may be somewhat pre-mature. Soup is rarely eaten as hot as it is being served!  The ‘safe’ time to invest is not necessarily at the bottom of a market but after a significant recovery. Yes, you may lose out on a quick double but the risk is catching a falling knife. 
Yet, my gut tells me that the worst is over for the energy markets.  Unfortunately, it is the U.S. that controls the North American energy exports while Alberta and B.C. and the Northern Territorial markets have been held hostage by well-meaning, but unscrupulously manipulated, activists. ‘Canadians’ never seem to learn!

 

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