Did I Get IT Right?
Did I Get It Right? ...
In my blog yesterday I projected a SURPRISE increase in the crude inventory as new players enter the contango game.
" U.S. commercial crude oil inventories increased 6.1 million barrels for the week ended Jan. 16, compared to the previous week, according to the Energy Information Administration. That's more than the 1.4-million-barrel increase expected by analysts surveyed by Reuters. "
Look at the US EIA report ( smiling ) for the SPR. On 1/2/2009 the SPR was holding 701,824,000 bbls. On 1/9/2009 the SPR was holding 701,890,000 bbls. An increase of 66,000 bbls. I expect to see more increases here.
The market reacted negatively to the surprise increase, the market isn't thinking " contango ( which I believe is bullish, not bearish ), " the market is thinking "demand issues" and therein is a golden opportunity to profit from their error. The contango players are absorbing those demand issues. Buy the energy sector now ... BEFORE OPEC pushes capacity surplus to 7 - 7.5 million bbls per day, cuz' OPEC wants $75/bbl ... is no doubt going to over correct and then you'll get $75 - $100/bbl crude before year end ... .