Averaging $96 so far this summer, crude oil certainly doesn't feel cheap. Nevertheless, its technicals are looking increasingly bullish. After recently bouncing out of a major correction, oil appears to be embarking on a new bull-market upleg
This year has been eventful for the oil patch. Natural disasters, revolutions, terrorist attacks and political maneuvering kept oil bouncing around $100 per barrel and 3.8% higher on the year at the end of June.
Oil markets took another dose of global geopolitics last week when the International Energy Agency unexpectedly announced that it would be releasing 60 million barrels of oil from strategic petroleum reserves around the globe.
The successful resource investor who loves energy equities because he can uncover treasures still hidden from the very markets that will later recognize their value and bid them up names some of his current favorite positions.
It seems as though even more traders are expecting some period of consolidation. Lower prices and a period of consolidation make sense, but what I am more interested in at this stage is a clear setup that offers solid risk/reward.
As an investor, this volatility can be difficult to handle. Throw in the uncertainty of today's geopolitical environment, and investors feel the need to downsize their positions in commodity investments, such as oil.
Gold has remained robust despite the potentially negative short term implications for safe haven demand due to Bin Laden's murder, suggesting that market participants realize the global economy faces greater challenges.
It's not just geopolitics that is threatening production. Oil demand has been picking up in both emerging and developed markets. Oil demand in China and the US has been rising since mid-2009, well before the uprisings began in the Middle East.
Gold ticked lower momentarily to $1,417.63/oz on the open in Asia prior to rising to over $1,432/oz where determined sellers sold aggressively, sending gold back down to near Friday's closing price on the London AM Fix.
March Madness is still a few weeks away for college basketball fans but the madness of March is in full swing for the oil sector. Turmoil in the Middle East sent oil prices up more than 6% last week and seasonal factors are also in play.