EIA Gives Crude Oil a Shot in the Arm
Source: Seeking Alpha, John Dalt (8/20/09)
"We have lost profits by stepping out of the oil trade for the past two weeks. I hate that. . ."
The Energy Information Agency (EIA) gave crude oil a shot in the arm yesterday. Inventory dropped 8.4 million barrels. Gasoline inventory dropped 2.1 million barrels. Diesel and other distillates dropped 700,000 barrels. I can’t tell you how surprising these numbers are to me. Get long oil—the trade is on!
We have almost erased the build in inventory in one week.
We have lost profits by stepping out of the oil trade for the past two weeks. I hate that, but there was no compelling reason to own oil when inventories were building, the dollar was strengthening and investor confidence in the world economic recovery seemed to be waning.
If you cannot make a good argument to be in a trade, you are better to be out. By my calculations, we have missed a 3% gain on crude oil. I accept that. I was fearful of a 20% pullback. Before you rush into the U.S. Oil Fund (USO), we should be a little suspicious of the big change this week. It wouldn’t surprise me to see a big swing the other way next week.
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