LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

GoldSeek Radio: Professor Laurence Kotlikoff, Professor Alexander Kosovichev & Robert Ian
By: Chris Waltzek Ph.D., GoldSeek Radio

You Know Things are Falling When…
By: David Haggith

Gold & Silver Prove Once Again, They Go Up When Most Everything Goes Down
By: SRSrocco

Why Debt Won't Spark Inflation
By: John Mauldin, Thoughts from the Frontline

COT Gold, Silver and US Dollar Index Report - May, 24, 2019
By: GoldSeek.com

BIS reduces its gold swaps by two-thirds over last two months
By: Robert Lambourne

Gold Mid-Tiers’ Q1’19 Fundamentals
By: Adam Hamilton, Zeal Research

China Threatens to Stop Exports of Vital “Rare Earth” Metals to U.S
By: Mike Gleason

Every Bounce In Tesla Stock Can Be Shorted
By: Dave Kranzler

Another Gold Buyout Takes Center Stage
By: Marin Katusa

 
Search

GoldSeek Web

 
OIL update - has the advance finally run out of steam?...

By: Clive Maund

 -- Published: Sunday, 5 June 2016 | Print  | Disqus 

It still looks like oil is topping out here at about the $50 level after its substantial recovery uptrend from its February low. While we cannot be sure until it breaks down from its uptrend, the chances of its doing so soon look high for various reasons. One is that the current intermediate uptrend has been going on for a long time now and has resulted in a persistent overbought condition. Another is that it is quite some way above its 200-day moving average, which although it has turned up, is still only rising gently. Another is that it has arrived at resistance at the upper boundary of a trading range that developed last Fall. Still another is that its latest COT looks bearish, with Commercial short and Large Spec long positions being at their highest for about a year. Finally, the broad market looks ready to roll over, after its rally up to resistance of recent days, and if it does it is likely to take oil down with it, probably against the background of a continued rise in the dollar.

Click on chart to popup a larger clearer version.

The 1-year chart shows that the advance has brought Light Crude up to a zone of significant resistance where it appears to be stalling out. This is a good point for it to turn down again, probably in tandem with the broad market…

A factor that has supported oil prices for much of this year has been the persistent “contango”, which means that prices for future delivery of oil are significantly ahead of spot prices, probably caused by the market’s erroneous expectation that the shutting down of capacity will lead to a shortage and thus higher prices. This belief, coupled with high production, has led to an armada of ships bulging with Crude, sitting offshore, with the owners holding the mistaken belief that they will get higher prices later. Thus, the dramatic development of the past few weeks, during which the contango has collapsed, so that it has already become uneconomic to store oil offshore, means that the screw is now being turned on owners storing oil offshore. With the market glutted, and contangos collapsing, owners are being forced into the bizarre position of resorting to debt-funded storage, a highly anomalous solution that is clearly untenable over the longer-term. What this means is that a large number of bulging ships are soon going to race to shore to disgorge their cargoes for what they can get, a development that could magnify the downturn in oil that we are expecting into a rout of plunging prices, made worse by the fact that prices have been artificially elevated by excess storage in expectation of rising prices, which has so far been a self-fulfilling prophecy – but when all storage capacity, onshore and offshore, has been used up, that’s it, it’s game over, and that appears to be the situation that we have arrived at.


| Digg This Article
 -- Published: Sunday, 5 June 2016 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus

Web-Site: CliveMaund.com



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.