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April 13, 2005

Crude Oil news, Wed., April 13, 2005, 10:51 AM

I am wondering how much yesterday afternoon's jump in the U.S. equity market had to do with the just minutes ago released crude oil inventory number that is causing a sell-off of crude oil contracts. Specifically, who knew what, when?

If you truly believe the 2:00pm move yesterday was linked to the FOMC Minutes release, then you have a bigger personal credulity issue than you might think.

Moreover, have you been watching the USD this morning? There is one head fake after another, which makes it kinda hard for the gold bugs to get too excited.

I suspect the equity bulls are just trying to get things stirred up. It's not good to be dwelling on Fed tightening if you are a fixed income or equity market bull.

According to my crystal ball, it's most likely that crude oil contracts in the short-term cycle will bottom out at $47. That would be a good time to consider getting back into the Canadian oil sands plays: NYSE: SU, NYSE: CNQ, and AMEX: IMO.

As to the Dow 30, it's likely to return to its vacation, soon. As oil stock prices fall, there is nothing really left to hold up the rest of the broad equity market. This isn't rocket science, but for some reason I get letters on this, and I see CNBC questioning why.

If you happen to be managing a project, doing all the heavy lifting, and you get tired, what happens to the project? Same thing here; the oil sector has been carrying this equity market on its back.

Posted by Posted by Bill Cara on April 13, 2005 10:51:52 AM | Category: Cara Today in the Market