Thursday, October 22, 2009

Where's Oil Headed? 10.23.09

Crude oil reached a new high of $82/barrel earlier today. I expect the rally today was related to the Chinese growth story as well as continuous dollar weakness. However, a weak dollar is a reality the U.S. government will have to live with for the time being. China reported GDP growth of 8.9% for the 3rd quarter 2009. This may be a farce but numbers can't be fudged more than +/- 200-250 basis points. Hence, the economy continues to grow rapidly, and thus commodity consumption will continue if not grow. Additionally, stocks of Crude oil failed to meet analyst expectations rising only 1.3M barrels last week. My short-term outlook is a price range of $75-85 barrel if the RSI can sustain its momentum. Currently the RSI is overbought at 74.16 with the previous high at 77.81. Also, CL1 pierced the upper Bollinger band at 20 days, 2 standard deviations. I expect a bounce off to about $78 or so before we see more upside movement. Long-term I am extremely bullish. Prices of crude will rocket to $100 by late January early/February. Next week I will look to enter into long position into the USO when prices retreat.


Patrick M. Ambrus
Analyze Capital LLC


  1. see my blog for 10.23.09, watch that pull back in equities and crude, dollar strength is eminent in short term.


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