Where’s Oil Going?

That’s the $100,000 question.  I don’t believe the bull run is over at this point.  However, we’ve seen a big pull back since hitting $146, down around 15%.  This reminds me of gold when after it had its big run from August of 2006 until March of 2007.  It went from $680 to its high of $1025 or so.  Then, it fell back to $850 in two months (losing exactly half of its gains).  After that, it moved sideways for a couple of months and then popped in late June and early July. 

Oil has run straight up since really the last week of January 2008 from $85 to $146 pretty much straight.  That uptrend is broken.  No question about it.  But, some will come in and buy this dip at some level.  I believe it will stop around $115 or so.  That would be roughly giving back half of those gains in 2008.  Then, perhaps we’ll get some stabilization and just be in a trading range for oil in the low $100s.  Then, we’ll have a better gauge whether oil is pausing or will break down to another level, perhaps below $100.

I think the long-term bull market will continue but I don’t believe you need to rush in there.  It looks like we’re going lower for the short-run but currently I have no trade on in either direction on oil.  I do own RIG & PBR still and will add to them on some stabilization.

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