Is The Oil Bubble Ready To Pop?
Posted on June 26, 2008
Filed Under Trading |
I cannot believe I haven’t posted since May 30th when I predicted an imminent fall in the price of oil. Whilst this has not happened (yet) our world leaders have been rushing around desperately trying to deflate the commodity bubble and thereby increasing their own carbon footprints by about 1000%. I still believe the commodity market is overheated and due for a major correction. Market tops and bottoms are characterized by excessive volatility - great for day traders but nightmare for longer term investors.
In the meantime even the great Soros himself has confirmed that, in his opinion, a large element of the oil price is speculative and that we can expect a sharp pull back. In addition once politicians begin questioning how the price of oil has effectively decoupled from the fundamentals of supply and demand we can expect something to happen.
Last month’s data from the CFTC on futures contracts did show that at one point a speculative “short” position on oil jumped 11pc suggesting that some of the big boys, at least, suspect the oil boom is overdone and ready for a fall.
However, this is somewhat contradicted by the December 2016 futures which have been rocketing to fresh highs, in some cases accelerating at an even faster rate than spot prices. My personal view is still the same - I believe prices will fall but only this time I will remind myself of my own advice and not try to predict a market top.
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