Time to Buy Oil?

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...It may take a while and you may have to weather a hurricane or two that will pump a temporary rise in prices but I think if you are patient, you will be able to pick up the USO (U.S. Oil Fund ETF) and the price equivalent of crude for under $100.

With the current price roughly 25% off its high, it is time to put oil back on the radar screen...

Buy now? No.

The global economy by almost every measure is slowing. Will it be a "global recession"? No. The pace of expansion will just slow. That will relieve some demand stress on the whole equation. The US economy, the main consumer of oil, looks as though it will muddle through in 2009.

That said, the supply / demand equation for oil--tilted to the demand side for the last year--ought to begin to stabilize. As it does, interest in the commodity will wane as easy profits will diminish. As it does, the price of oil (barring any significant geopolitical event) will slide with it.

How far? Under $100, or another 7% to 10% lower. Long term, the demand for oil will rise significantly. Any temporary demand reduction from China or India will be just that, temporary. The US will awaken from its current snooze and demand at home will grow along with it...

It may take a while and you may have to weather a hurricane or two that will pump a temporary rise in prices but I think if you are patient, you will be able to pick up the USO and the price equivalent of crude for under $100.

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