Crude Oil, Average Monthly Gain

Chart of the Day notes that "increased Middle East tensions" (i.e. “acts of war”) has sent crude oil (Futures) surging to new 24-year highs of $79.70 per barrel.

"While the geopolitical risks associated with the oil supply are difficult to predict, today’s chart illustrates that the average monthly price of a barrel of West Texas Intermediate Crude has had a tendency to rise from July to October as more cars hit the road for the summer driving season. Increased risks on the supply side (i.e. supply disruptions) occurring in unison with increased demand make for a volatile mix indeed."

Note that seasonally, July is a positive, while August & September are hot months for Crude Oil:

20060714

Source: Chart of the Day

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UPDATE: June 17, 2006 6:14am

Note: These were Futures prices — purchases for delivery in 60 days; Not surprisingly, they often (but not always) lead actual prices by 30-90 days.

Crude Oil traded to a new 24-year high of $76.70 per barrel.
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Discussions found on the web:
  1. GRL commented on Jul 14

    How would the markets handle a Hezbollah attack on Tel-Aviv?

  2. saltwater commented on Jul 14

    Any thoughts on using foreign mmkt’s or cd equivalents to hedge a declining dollar?
    btw…. I am amazed at how many times I have read something from this blog….. then days later ( sometimes months later), see it as a “breaking news” item on some media outlet or talking head show. It’s great to be ahead of the curve for a change….. or at least aware a curve could be coming. Many thanks.

  3. JefF commented on Jul 14

    stick to this site Saltwater …. always ahead of the curve ….. we’re expecting 2000 point sell-off …. stay in touch

  4. whipsaw commented on Jul 14

    There are a lot of reasons to think that The Rupture is here ahead of schedule and that the long predicted dive has already begun. Next week will determine that-
    aside from lots of earnings reports, PPI, CPI, TIC data, and FOMC minutes, The Cooler testifies twice before Congress and the ME seems to be in meltdown.

    Be that as it may, I still guesstimate a sharp rally for at least a day, probably on Turnaround Tuesday unless we have a Black Monday (possible). If nothing else, shorts may run things up by covering to protect profits ahead of further uncertainty. But even in that event, the roof on $SPX has been progressively lowered and it’s just a question of time before it goes into real freefall for a while until the October (or maybe September) Miracle occurs.

  5. Richard commented on Jul 14

    2000 point selloff? surely you jest. you must balance bearish tendencies with a jolt of realism. if the middle east crisis escalates into a regional conflict i could see testing 10,000 but not much more carnage IMO.

  6. JefF commented on Jul 14

    you’ll have to read this site a little longer ….. 2000 more DJIA points downward is what we’re looking for …. and this was before the ME meltdown

  7. whipsaw commented on Jul 14

    If you want to get ahead of the curve, have a look at:
    http://www.minyanville.com/articles/index.php?a=10768

    This isn’t crank stuff and portends a rather dramatic downturn in the economy, followed by a homeowner (read “lender”) bailout by the govt. If you can’t envision that happening under an administration that is allegedly full of “free-market capitalists,” you apparently were not around when Dick Nixon imposed wage & price controls.

    But I think that after 27 years of embedding the corporate welfare state into our midst, printing money may be running out of headway as a solution to everything for these “free marketers.” I’m not much of a goldbug, but have had some nice proxy trades lately and understand the basic premise that the currency of a debt-ridden empire is not the thing to be in. The problem is that if your asset accounts are measured in USD, then you have probably done no more than held even, at least if you have to use USD to do things like pay bar tabs.

  8. nr commented on Jul 14

    Eventually you’ll learn that predicting short-term movements of the market is a mug’s game, JetF. A 2000-point drop could happen. But if it doesn’t, promise to remind us how wrong you were?

  9. eb commented on Jul 14

    it doesn’t quite make sense that crude prices would go up in july-sept because of summer driving season. if that were the reason, wouldn’t crude go up more in march/april/may as crude is purchased to be refined into gas by june/july/aug/sept? in fact the chart even seems to suggest that. then again, i don’t know what the turnaround time is for refining WTI. maybe then the gains in aug/sept are purchases for refining heating oil for winter? just a thought.

  10. Craig H commented on Jul 14

    Though I’m bearish, I’ll take the bull side of the argument on a couple of technicals.

    Seems like some big money stepped in and propped up the market at around 2pm (Ben and the ‘Plunge Protection Team’ dropping cash from black helicopters???).

    Looks like “they” succeeded in preventing penetrations of the June lows on the Dow, SP500 and Russell 2000 today, creating double-bottoms.

    New High/New Low ratio is very low, indicating an oversold condition, though just not quite as low as in June.

    Nasdaq Composite closed a tad lower than the Oct. 2005 low, but off the low for the day – and NDX closed at an area that could be considered chart support from April 2005.

    Daily chart’s short-term oscillators on all those indexes are oversold.

    On the “we’ve got further down to go on this leg” side of the ledger:

    Zweig Breadth Thrust isn’t as low as it was in either the May or June bottoms, indicating more room to fall.

    NYSE stocks above their 40 day moving averages is at 33.59%, versus the June low reading of 13.59%.

    NYSE stocks above their 200 day moving averages is at 41.45%, higher than the June low reading of 33.71%

    Absolute Breadth did not reach as high a level as it did in the May and June bottoms. It’s at 39.81 and readings over 50 generally indicate a bottom.

    Ditto for the Mcclellan Oscillator which hasn’t hit the low levels of May and June.

    5 and 14 period Stochastics on the weekly charts of the indexes have further to fall for them to be deeply oversold (sub 20).

    Watch out for those black helicopters. Ben only got his pilot’s license a few months ago.

  11. Brion commented on Jul 14

    nicely -put- Craig H.

    Whipsaw, I’m using the “Rupture” from now on. It’s snarkalicious.

  12. yc32 commented on Jul 14

    Boy, a lot of people are predicting a final rally before bear market. I guess the last rally to lower highs (1300?) likely won’t happen.

  13. Ronnie commented on Jul 15

    Here’s another little technical tidbit. On a monthly chart, since SPX first closed above the 10 month EMA back in April ’03, it has never closed below it (except possibly marginally in April ’05. on my chart it sits right on the line).

    There were big spikes below the 10 mo EMA (intra-month) in Aug ’04, April ’05 and Oct ’05. In each case, the monthly chart turned up the following month and SPX then rallied into a higher trading range.

    Last month saw another big spike below the 10 mo EMA but managed to reverse most of the drop and close above it. So far, however, July is not acting much like the following month in those three previous cases.

    Of course the month is only half over but if July can’t turn the SPX monthly chart up (above 1290.68), I might get a little nervous if I was long (personally I’m all cash – including euros). The next few weeks should be interesting indeed.

  14. whipsaw commented on Jul 15

    “Whipsaw, I’m using the “Rupture” from now on. It’s snarkalicious.”

    I saw somebody else use it around here several weeks ago, but recognized it immediately as one of the tenets of The Church of Subgenius. If that doesn’t ring a bell, see http://en.wikipedia.org/wiki/Subgenius, explore further and laugh your ass off. Then go to the real thing at http://subgenius.com/ and become ordained.

  15. whipsaw commented on Jul 15

    per Ronnie:
    “Of course the month is only half over but if July can’t turn the SPX monthly chart up (above 1290.68), I might get a little nervous if I was long (personally I’m all cash – including euros). The next few weeks should be interesting indeed.”

    Ain’t gonna happen. SPX couldn’t even hit 1280 twice this time around and will be very lucky to hit 1260 again. This market is deterriorating more quickly than I expected and I think it may tie back to a comment I made a few months ago about Katrina and whether the dislocations that BR has noted had made the stock market into a concurrent indicator of the economy instead of a leading one?

    Anyway, I think that we probably get a fool’s rally sometime next week that will be a good chance to get short or get out, then ride it down at least until the next fed meeting August 8 and probably until the September 20 meeting, at which time Magic will happen and black will turn white for about 2 months for political reasons.

    I personally won’t trade against the current cycle, so I am just going to throw an aggressive amount of money into puts this coming week, try to call the bottom in Aug/Sept, and then bail until things stagger into another top in November and it’s time to make some real money in a true crash around January. Fun.

  16. Craig H commented on Jul 15

    Ronnie,

    I see what you mean. A 300 day EMA also hugs the trendline I use for SPX pretty closely. I draw mine connecting the 08/03 low to the 08/04 low on an arithmetic chart. SPX has managed to close above it on every correction since the bull kicked off in 2003, but last month and this Friday we had two closes below it.

    They lose that trendline with conviction, with a dip to like 1200, and it’s going to be hard for even the bullish technicians to keep snorting. A failed rally back to the trendline would convince all but the most stubborn perma-bulls that the uptrend is over and they face more than a bull market correction.

  17. larry commented on Jul 15

    i covered my Qs short yesterday after looking CCI and RSI indicators. nice 5% in a couple of days. i am not greedy.

  18. larry commented on Jul 15

    after reading the whole thread – that HUGE open interest in putz for Qs, DIA, SPY supports and likely will continue to support the market for some time. i have no idea who is option writer(s), but i think that quick meltdown of the market is unlikely event. typically hedge fund can write puts and sell minis keeping the position fully or partially hedged.

    there is a chance that some guy(s) out there wrote naked puts with strikes just at 200MA. significant move under the MA can bring us interesting news and may be a (not)funny story or two to talk about

  19. Andy commented on Jul 15

    *it doesn’t quite make sense that crude prices would go up in july-sept because of summer driving season. if that were the reason, wouldn’t crude go up more in march/april/may as crude is purchased to be refined into gas by june/july/aug/sept?*

    I’ll take the bait, eb:

    You see both strong upward moves in April (for driving season) and Aug/Sept (for winter heating season). Those are the months when the refineries retool and switch over some of their production to the upcoming season’s needs, lowering available production for current needs in anticipation of future needs.

    And this doesn’t even take into account that Aug/Sept is also hurricane season extraordinaire in the Gulf of Mexico, affecting refineries, transport, and extraction (sometimes even significantly).

  20. Funk commented on Jul 15

    “Who has the guts to buy today?”

    buying today is by far the hardest trade to make, even for someone in cash or someone who’s short. Often, the hardest trade to make is the best one.

  21. Craig commented on Jul 15

    I don’t know if it’s guts, but i bought Friday. Could have sold both positions at a profit, but decided to put in some very tight stops after they had a little run-up late friday. I expect the sucker rally next week and I’ll off them to cash then.

    BA reached the former low (almost) and VLO at 63 and change was my throw of the dice over this F’ed up weekend. I’ve been trading BA and VLO for the last month or so for some decent cash. Also made some $ trading HCA. I still hold some oil trusts which are bucking the market these days.

    The reason crude lags the actual use/driving season is because supply follows demand…IE: Gasoline prices lead crude. The demand has to come first, then the supply kicks in with a bit of a lag. This also fits the retooling phases.

  22. JAck commented on Jul 15

    I’m going to have to save that chart. I just happened to sell my USO (US Oil) etf Friday for about a 10% gain from the June lows. I had planned to get back in, hopefully at a slightly lower point before the August hurricane month.

  23. larry commented on Jul 16

    i do not understand why people buy USO. i read again and again abotu USO and i fail to see what is so spectacular about it. this is basically XOM

    USO:XOM

    there are so many oil plays, like IGE
    IGE:XOM
    PTR
    PTR:XOM
    LETRX
    LETRX:XOM

    compare USO and light crude contract
    USO:$WTIC
    and the same with PTR
    USO:$WTIC
    and IGE
    IGE:$WTIC

  24. larry commented on Jul 16

    “The oil crises of the 70s sparked a resurgence in cycling coincident with the arrival of these “new” designs, and this time competition was not the driving force, so the UCI ruling did not prevent the commercial development of recumbent designs.”

    from wikipedia: Recumbent_bicycle

    recently 60 years old guy did 50+ miles in one hour – new world record for human powered device.

  25. Jack commented on Jul 17

    larry,

    I can’t tell you why others like USO, but for me, it is because you know what your getting. When oil is up, USO is up, and vice-versa. For, XOM, PTR etc, the price is based on more than just the price of oil. Reserves for example play a large part.

    At least, thats *my* semi-educated view.

  26. larry commented on Jul 17

    USO does not behave like exact oil proxy
    USO:oil contract
    actually it behaves pretty close to IGE and IGE has better volume.

    for example GLD and gold contract are rather close. may be USO is an expensive ETF ?

  27. Jack commented on Jul 17

    Yeah, you seem to be right. Thanks for educating me. Although the correlation is good, it does appear to be a *real* expensive ETF. Maybe thats because its new???

    I guess I’ll have to find a new vehicle to take advantage of increasing oil prices.

  28. larry commented on Jul 18

    loosely (un)related question
    any motorcycle, bicycle stocks ? Suzuki, Yamaha, Kawasaki ? Trek, GT ?
    i know about shimano, hdi, hmc
    anything else ?
    carbon fibers besides SGG and ZOLT ?
    any titanium related stocks ?

    ETF or reasonably cheap fund playing ecology

    any tips are greatly appreciated

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