Slider, While I share your concerns about a possible correction to the oil price that moved so fast, I have the following thoughts for you and others to comment on.
First there seems to be contradictions in your expectations for the next two weeks. On one hand you think oil will likely correct and put pressure on osx and oil stocks. If this is to happen, how will the longs sell on the good news of good compliance on May 10th as you indicated? Do you see the sophisticated investors who are in the habit of selling on good news will wait to May 10th to sell while they see the prices going down between April 26 and May 10th?
Second, the report you showed about why oil went down on Friday gives very serious reasons that should have pushed the price a lot lower than it did. This is why I do not belive the report. If investors and speculators were worried on Friday about OPEC compliance, I would have seen oil dropping 10% or more, not 2%. Also, If you read Yamani's comments more carefully, you may see that they are related to the long term not the short term of the next few weeks or few months. Any way, will see what happens next week.
Third, We all have noticed that oil, after moving that high in such a short period of time, held its own and even continued to advance. Now, do you think that the speculator who are long the oil are so nice as to hold the prices that high for a long time, allowing many oil companies who are cash starved to hedge their production at $16, $17, and $18? The 30-day moving average of oil is above $16 which means that oil companies had ample time to hedge their production for many months to come at or above $16. Do you believe that the oil market is so kind to them? Or is it that the speculators are pausing to allow this hedging (shorting) by oil companies and then move the oil price even higher? Which in your opinion is the more likely scenario? |
