Today’s powerful move north in Crude Oil continued after the New York close, and is partially responsible for sparking a rally in Gold and Silver prices after their bottoms today (recent declines in Gold and Silver prices were due to profit taking on its recent bull market leg up). I am looking for these strong up trends in Crude Oil, Gold, and Silver to continue into the future days, weeks, and months. Notice that the stock market equities tanked near the close today, finishing down 1% on DJIA, 3% on Nasdaq and 1.6% on S&P 500, even though they were up over 1% in the beginning of the trade. I expect these downtrends in the stock market equities will also continue, as realities take over concerning the impending and continuing OPEC production reductions, and rising Geopolitical tensions in the Middle East and Afghanistan.
Ok, yesterday when the oil inventory numbers were released the price of crude headed down. An hour later the price began to spike. My take is that there are powerful traders who can trigger a fear rally whenever they want to rip off the general market. When they start bidding the price rapidly higher they can cause the short sellers to pile in. This accelerates the upward move and thereby manipulates the market. Even if we’re to believe the numbers, (and I don’t) less productions means more capacity. You following me… More spare capacity means we’re not running out of crude or the ability to turn it into the final refined product. This news was actually very bearish. The not so nimble traders will soon learn as oil heads back to where I think it will be most of the summer, the $35 area. OPEC will meet in March to chat about another potential production cut. The cartel already has announced a production reduction of 4.2 million barrels since September, equivalent to about 5% of global oil demand. You decide, which way do we go?
