I've been doing a bit of trading in the market and am currently out of crude oil but only because I sold it earlier this week.
For my crude oil investment I was holding the ETF traded under the ticker symbol: OIL
I sold at "OIL" at an average price of $27.87.5, it peaked at $27.89. It has now dropped 2 days in a row. I'm not sure how far it will pull back but I've been lowering my 'buy' price to keep tracking the downward pull. I had it set at $27.30 but this morning I dropped it to $26.80 (possibly too low). Right now the price is hovering around $27.20.
Here are my thoughts. The US Dollar is getting weaker and there is potential for an inflationary trend over the next year or so. The EURO is getting weaker and the Greek debt crisis will drag it down further. Oil is traded in dollars and as the dollar weakens actual value goes down, which may force the price of the good up. Further we are going into high demand season for oil and there has been no increase in output. There are currently high inventories of oil, but those will be easily depleted as demand kicks up.
Now I also see some risk, if the actual cost of crude oil goes too high then the worldwide recession will linger, I don't think that OPEC wants that to happen so I don't believe they will choke off supply to artificially inflate the price of oil. I also don't think they will open the spigots to keep it low, they are playing a balancing game. Over $100 and they will probably increase supply, but if it drops too low they are not going to meet their costs.
I don't know if crude oil will hit $100 per barrel, its been trading lately at $75 to $85 per barrel, but if it does reverse this current little pullback, which I expect, then the share price of the OIL ETF could go up a couple more dollars in fairly short order. If it does hit $100 then I'm not sure it will remain there very long -- at least under the CURRENT situation -- however if the economy continues to slowly improve then there may be incentive to let it slowly creep higher and higher, especially if the Dollar and the Euro lose value.
I don't think I'd be playing oil company stocks like Shell or BP, this is strictly a commodities trade. The OIL ETF is not the only ETF that roughly tracks the price of crude so there are other vehicles to play the price fluctuations in crude oil.
Thoughts?
For my crude oil investment I was holding the ETF traded under the ticker symbol: OIL
I sold at "OIL" at an average price of $27.87.5, it peaked at $27.89. It has now dropped 2 days in a row. I'm not sure how far it will pull back but I've been lowering my 'buy' price to keep tracking the downward pull. I had it set at $27.30 but this morning I dropped it to $26.80 (possibly too low). Right now the price is hovering around $27.20.
Here are my thoughts. The US Dollar is getting weaker and there is potential for an inflationary trend over the next year or so. The EURO is getting weaker and the Greek debt crisis will drag it down further. Oil is traded in dollars and as the dollar weakens actual value goes down, which may force the price of the good up. Further we are going into high demand season for oil and there has been no increase in output. There are currently high inventories of oil, but those will be easily depleted as demand kicks up.
Now I also see some risk, if the actual cost of crude oil goes too high then the worldwide recession will linger, I don't think that OPEC wants that to happen so I don't believe they will choke off supply to artificially inflate the price of oil. I also don't think they will open the spigots to keep it low, they are playing a balancing game. Over $100 and they will probably increase supply, but if it drops too low they are not going to meet their costs.
I don't know if crude oil will hit $100 per barrel, its been trading lately at $75 to $85 per barrel, but if it does reverse this current little pullback, which I expect, then the share price of the OIL ETF could go up a couple more dollars in fairly short order. If it does hit $100 then I'm not sure it will remain there very long -- at least under the CURRENT situation -- however if the economy continues to slowly improve then there may be incentive to let it slowly creep higher and higher, especially if the Dollar and the Euro lose value.
I don't think I'd be playing oil company stocks like Shell or BP, this is strictly a commodities trade. The OIL ETF is not the only ETF that roughly tracks the price of crude so there are other vehicles to play the price fluctuations in crude oil.
Thoughts?