Robert (and Yogi), *Black and Yellow Gold*
Oil will correct a little until the API numbers, which of course can't possibly show any result of the OPEC decision for 6-8 weeks. Especially with near 100% tanker utilization! Of course, this is the "shoulder season", when oil and natural gas inventories are replenished, demand being reduced as summer heat for AC (NG) and summer driving (crude) are behind us and heating season (both) has not begun.
Then again, I expect that any drop in crude will cause a lot of buying by refiners and consumers reluctant to pay near all time highs for the Black Gold, especially with it in backwardation. Could be a self perpetuating cycle for awhile and if we get the cold winter (relative to last few years, anyway) I am forecasting, it could last a good while.
When will Yellow Gold have its turn? The dollar is on a tear of its own having breached 115 on the dollar index tonight. This is a multi year high going back to the 80's. I suppose this makes the price of oil all the worse to the rest of the world, especially the Euro which has dropped 25% plus in its short history. As the dollar spikes gold has not reacted as it should, at least so far.
The dollar chart has a target of 118-119 and I suspect when it reaches that area it will correct and THEN gold may react in a positive fashion. Pressure will be mounting and perhaps its keepers, whether they be the market or central banks, will have to let it out of its strait jacket for awhile.
Quite possible that once Gold is freed of its bonds, it will no longer be the model prisoner, but make its breakout to freedom, from the Price Inflection Point Prison, as oil has done from its dark dungeon days there.
Keep the faith,
Roebear |
