Wednesday, September 10, 2008


The Oil inventories reported by the U.S. Department of Energy showed a draw of over 15 million barrels of total products.  Next week should show a significant drawdown as well.  

It would appear that TPTB have successfully driven all of the speculative money out of the Oil futures market.  But the physical market still rules, and with inventory drawdowns like this, and the less than spectacular production data, going into the Northern Hemisphere winter heating season, it is my bet that the climax selloff/capitulation in oil, whenever it comes and whatever it looks like will be the moment to reenter the Oil futures market.

With oil down with draws like today, a sell off down to $80 or $90 is not only possible, but probable.  Then you got to pick your spots.

Mentatt (at) yahoo (d0t) com


Anonymous said...

If every (hedge) fund is liquidating assets, and that is driving down the prices of practically everything, who exactly is going to step up with their new millions of dollars and start buying again? I hope they aren't waiting for me to do it. :)

Anonymous said...

Helicopter Ben and the FED will rescue us!

Donal Lang said...

Anon asks who'll step into the market and start buying; I'd guess it'll be the Middle East investors who have PLENTY of dollars to play with, and who'll benefit from occasional high oil prices, i.e. sufficient to increase income, then backing off before too much demand destruction. Such a 'tweaking' strategy would be far more profitable than staedy prices, especially if you knew when the peaks and troughs were coming. It also gives the opportunity to dump tranches of dollars.

Bureaucrat said...

Don't be too surprised if the Middle Eastern investors don't show up. :) Many of the oil-producing states have borrowed lots of money against their future oil revenues (Mex & Ven come to mind), and further, these states are no longer as rich as people might think. Takes a lot of money to support these "paradises" they have built for themselves (indoor snowski hills, etc.) There are 25,000 members of the Saudi royal family, and keeping up just with spending for them is becoming a struggle. I still don't see where the money is going to come from.