NYMEX Oil Complex Soars as Records Fall Like Dominos


The NYMEX oil complex soared today as speculators continue their march to new record highs for crude oil, with the new record set today at $113.99. The big speculators such as Wall Street firms, hedge funds and the more recent group of currency and stock traders have joined forces as they continue to hype supply worries of one kind or another as the reason for higher prices. A partial list of reasons are tight supplies due to extraordinary growth in China, India and some Middle Eastern countries, a weak US dollar, geo-political concerns from oil producing countries Iran, Iraq, Nigeria, and Venezuela. While all of these geo-political concerns have been used on and off for nearly four years there has never been a major disruption. Not one. Therefore we can only conclude that what is driving prices higher is pure the fact that these firms realize they can do it uninterrupted, and laugh all the way to the bank. The U.S. economy continues to suffer and the sad part is it will just continue because this administration listens to its Treasury Secretary who is ex-Goldman Sachs, and he continues to tell everyone that it's "real supply problems."

We find it amazing that our leaders can intervene on behalf of some of the largest financial trading houses, some of whom are partly responsible for the sub-prime mortgage fiasco and the ensuring credit crunch, yet ignore doing something to stop this scam. All it would take would be an increase in interest rates when the Fed meets on April 29 and 30, or for Bush to open the Strategic Petroleum Reserve to refiners. None would want any crude from the SPR, but it might just convince the speculative community that there is plenty of oil around.

Our analysis for overnight trading is two pronged. We believe there is a better than a 70% chance we will see a new all time high for crude oil, since we closed very close to the record set today, it's rather convenient for the perennial price hawks to breach the $114.00 level that could set in motion a run to $115.00. However, a failure to do so would likely send prices down at least $1.00 to $2.00 as some of the more recent longs would probably book profits. This scenario has popped up on our radar as we believe the failure to breach $114.00 late in the session could be suggesting that even the perennial bulls are ready to take some profits.