Crude Oil Breaks Below $115

Friday, August 08, 2008 | 02:52 PM

Crude Oil is down to $115 (continuous cash futures contract). We also have some Backwardation -- meaning futures (September contract) versus cash or spot contract.

That’s bad mojo -- Markets are reading this as a positive, but I am less convinced. This looks to me like demand destruction brought on by a global slowdown is what has led Oil prices lower. That is not a good long term sign.

Efficient Markets? Well, if you think Whoopee! Global Recession! then sure. To everyone else, not so much.

September Futures Contract


For the more technically minded traders out there, consider these Fibonacci retracements: A pullback to $110 is very likely . . .


Continuous Cash Contract, with Fibonacci lines

Source: FusionIQ, Bloomberg

Friday, August 08, 2008 | 02:52 PM | Permalink | Comments (43) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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I wonder if its a combination of demand destruction and the commodity regulators finally cracking down. Looks like they started getting serious right around when oil started to come back down.

As far as demand destruction, its real. I don't go meet my friends at the movies anymore, its $8 round trip up from $3 when Bush started office.

Once the price of oil comes down to reasonable levels you'll slowly see people start spending more, but its going to take a long time for people to spend freely again. Everyone I know questions whether they really need something now.

Posted by: Martin | Aug 8, 2008 3:01:55 PM

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