LIke I said in other articles crude oil likely is going to be jumping around from about $50 to 30 dollars a barrel and back again. There are many reasons for this worldwide and the way all this will intersect with the stock market isn't really good either. So, expect things to get kind of crazy but not to stay any single place very long (the stock market or the oil prices).
Wed, Sep 2, 2015, 1:24AM EDT - US Markets open in 8 hrs and 6 mins
Crude oil falls 10% after another massive inventory build
By Myles Udland
8 hours ago
After a furious 3-day rally that saw prices of West Texas Intermediate crude oil rise 30%, WTI is down more than 10% to around $44.25 a barrel on Tuesday afternoon.
The latest leg lower follows data from the American Petroleum Institute that showed crude oil inventories rose another 7.6 million barrels. During the trading day on Tuesday, WTI was off about 8% while US stocks got slammed.
(FinViz) Now, the sell-off in crude on Tuesday doesn't come as a total surprise given that the last few days have seen unbelievable volatility.
And as Citi's Ed Morse wrote in a note to clients on Monday,
the recent moves look to be, "drive more by sentiment than reality." In
Morse's view, nothing has changed the outlook for oil, which he expects
to stay at a low price for the next several years as the market deals
with oversupply.
Among the factors cited for Monday's rally — which when all was said
and done came to around 8% — was a bulletin from OPEC that said the
12-member cartel was ready to talk with other producers.
Morse, however, thinks that the idea that this changes the OPEC story is a misreading of the situation. "In our judgment, this was a gross misrepresentation of the Bulletin's editorial which was wistful about such a dialogue," Morse wrote. "Almost
all OPEC officials are still on holiday and the lack of further
reporting suggests none actually were involved in suggesting there was a
change in policy."
Writing in Reuters on Tuesday,
energy analyst John Kemp, like Morse, thinks the latest move in oil is
largely psychological. As traders accumulated larger and larger bets
against oil as prices fell through the summer, Kemp writes that this was
a "classic example of what billionaire hedge fund manager George Soros
calls reflexive trading." (The basic idea behind reflexivity is
that selling begets more selling, a trend which is only broken by a
violent reversal. In Soros' view, the direction of market trends
reinforce themselves all along the way.)
"In some sense, the precise trigger for the short-covering rally is irrelevant.
It was bound to happen at some point, whether sparked by reported
revisions to U.S. oil production, Nigerian pipelines or any other
factors," Kemp writes.
"There is no need for a big
cause to explain a large movement in prices such as happened over the
last few days. In a complex system, a small trigger can result in an
outsized movement in prices through positive feedback and a cascade
effect."
NOW WATCH: These facts about Texas will blow your mind
end quote from:
http://finance.yahoo.com/news/crude-oil-getting-slammed-155045047.html
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