Crude Oil Looks Gassed - Another Bearish Sign?

Crude oil is looking gassed - is it in the process of topping?

Over on our sister site, we explore what's happening to crude - and why this may be bearish for oil prices.

Does crude oil have anything left in the tank?  (Source: StockCharts.com)

Oil Prices Get Rocked - Again!

It's been a tough couple of trading sessions for oil, as it's gotten walloped both days.  This is not a pretty chart towards the right, at least for oil bulls: 

Source: Barchart.com

Make no mistake, Peak Oil or not, the black goo has had a helluva run - from the $35, all the way up to $85 recently.  That's nothing to sneeze at, though less impressive when viewed with respect to it's freefall from $150.

If you believe that a severe stock market decline is on the horizon - as I do - then you probably also find oil's recent price action quite disconcerting.  It's gotten clobbered right along with equities.  If you're looking for a commodity that has held up fairly well, check out gold's recent performance.

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What, If Anything, May Hold Up If (When?) Stocks Tank Again

Judging by the price action across the board today - not too much...

Almost everything is getting kicked in the teeth today.

(Source: BarChart.com)

Crude oil and precious metals are getting taken to the woodshed along with stocks today - no place to hide there.

One bright spot - actually I should say one dim but not dark spot - are the grains. They haven't rallied much this year to date, so there may not be much downside from here.

Grains, by the way, are still one of my favorite secular plays - I just think it's best to avoid them right now. If the Great Depression is a guide, then grains should lead the way out of the Greater Depression as they did last time around.

$20 Oil Just Around the Corner? Energy Expert Predicts It

Crude oil expert Philip Verleger, who correctly predicted oil would hit $100 back in 2007, is now forecasting $20...this year!

Verleger says that supply is outpacing demand by 1 million barrels a day - and with the global economy not really improving, a warm winter could prove to be "devastating" for oil prices.

This jives with the outlook for crude that we looked at last Friday - there's just too much of it right now!

I imagine that $20 oil would probably destroy commodity prices across the board. Be very careful with your long positions, and if you are enterprising/brave, there may be some great short plays to be had in the very near future.

Hat tip to our friends at The Daily Crux for this nice find.

The Outlook for Crude Oil From a Top Industry Exec

Last night I had the opportunity to sit down with PG, who is the head of a small refinery based in Texas. We talked about the economy, and most specifically, crude oil - where the price may be heading, and supply/demand considerations.

(OK it's my father-in-law...we were having an after-dinner beer...but I'll take his insights on the energy complex against any of the talking heads on financial TV! He's been in the refining business for over 25 years, and really knows his stuff.)

***

On the price of oil...

Oil fundamentals don't support $70 crude oil. There is plenty of oil right now. Oil should be priced in the $40's and $50's based on fundamentals.

On the new potential CFTC regulations...

That would be good for refiners, because it would drive the price of crude down as the speculative premium is chased out of the market. (Brett note - looks like they may have started to break in already!)

Break-even prices for crude oil...

Although crude should be priced below $60, it actually needs to stay above $60 to keep North America drilling. A LOT of supply has come offline in the US and Canada, because often it doesn't make sense to drill below $60.

Could we see another price spike...

If and when global demand comes back, the price of oil will skyrocket. The high level of oil and gasoline prices today - with global demand in the gutter - is a testament to how tight supplies are. ANY real move on the demand side could send prices up...very fast!

***

Brett again - I wouldn't be surprised to see crude oil trade between $40 and $60 for some time. Now crude does have a history of going much higher...and much lower...than anyone expects.

I just think that with all the supply on the market, we're going to need to see a real recovery to the global economy to see a sustained rise in oil prices. And I just don't see any signs of that yet. But when oil does start to rise, we could be in for a helluva shock!

Crude Oil Hits Five-Week Low...Time For Another Nose Dive?

If there's one thing to say about the crude oil market, it certainly trends well...both ways. Check out this chart:

Crude oil takes a turn lower.

(Source: Barchart.com)

We've been hearing energy gurus for weeks scratching their heads, saying there's plenty of crude to meet demand today. But prices kept on climbing.

Well, now prices are no longer climbing. We first noticed that something might be amiss a couple of weeks ago, when crude failed to rally on bullish news.

It might be time to add crude oil to your suspect list of commodities that are vulnerable in the short term...you can put it right next to gold.

USL is the double-long ETF that you may want to take a look at shorting...if you've got the stomach to make this trade!