Crude oil hits $98.03
Posted by lowem,
Wed Nov 07 12:26:00 UTC 2007
Crude oil rose above $98 a barrel for the first time in New York as the dollar tumbled to a record low against the euro and a storm disrupted output in the North Sea. BP Plc and ConocoPhillips evacuated oilrig workers, adding to concern that supplies may be insufficient. The U.S. Energy Department is set to report today that inventories fell for a third week, according to a survey of analysts. Crude oil for December delivery gained as much as $1.33, or 1.4%, to $98.03 a barrel in after-hours electronic trading on the New York Mercantile Exchange. That's the highest since trading began in 1983. Futures have gained 66% in the past year.
The dollar's decline increased the attractiveness of commodities as alternative investments. A weaker dollar reduced the costs for buyers paying in other currencies. The dollar slumped to a record low against the euro on speculation interest rate cuts by the U.S. Federal Reserve will prompt investors to buy higher-yielding currencies. The dollar declined to $1.4666 per euro at 11:31 a.m. in Tokyo, the lowest since the 13-nation currency started in January 1999, from $1.4557 late yesterday.
"The supply and demand situation in the oil markets is super tight, we really have no wriggle-room whatsoever," said Brian Hicks, president of the Wealth Daily newsletter. "Any threat to supply is enough to send the price of oil up a dollar, two dollars every single day." Oil may reach $100 by the end of the week if the North Sea storm cuts production significantly, Hicks said in a televised interview.
- From a technical point of view, $98.03 is 40% above the 200dma. The RSI is hitting 69-70 and the Stochastics are hitting 89-90. The indicators are screaming overbought and yet it continues to power higher. At times, records are being set every minute. This is crazy. This is a runaway bull.
While the contrarians are cheering this on, we are also getting increasingly frustrated. We are pacing up and down. We are wondering, where, oh where the hell, do you make an entry point in this kind of market?
I'm looking back at my support levels chart. It bounced off $89 and I didn't even draw it. The blue lines are staring back : $85, $78, and $70. It would be absolutely freaky if I had to come back here and write that $100 is the new floor (!!!)
See also :
1. "It's going crazy" ($93.80) (29 Oct 2007)
2. Another day, another record ($92.79) (29 Oct 2007)
3. Oil rises to record $91.10 (26 Oct 2007)
4. Crude oil reaches record $90.02 after dollar drops against euro (19 Oct 2007)
5. Oil surges to record $88.20 (17 Oct 2007)
6. Oil futures hit new record above $86 (16 Oct 2007)
