Group hug in South America….

The 1  hour war I was at the Newscorp building most of Friday afternoon, in NYC.  I was shuffled from one studio to the next and as I was I watched as we went from shots being fired over the border of Columbia and Venezuela to an hour later a group hug between Chavez and other leaders.  The “war” is over. 

 I think what happened was that Chavez realizes Columbia has an army that would clobber him and with the happy backing of the US, and all the multinational companies he screwed when he nationalized the oil industry.  So rather than take a chance at Columbian tanks rolling on through to Caracas, and along the way taking back oil facilities….He thought about it and decided on hugs not drugs.  And whatever drugs he is on they must be powerful. Anyway, the good news is that what goes up eventually comes down, and oil is not immune to that equation. With oil at $106 and yet plenty of immediate supply on the market something has to give, at least short term.  Remember, $15-$20 of the oil price is speculative and that money swings either way…There is no doubt oil prices are going higher..and higher…and higher….LONG TERM. 

 That isn’t to say the downside will not provide opportunity too. Q2 is typically a period of time when we see slower demand for crude oil year after year and also it is a time when refineries shut down for seasonal maintenance.  Look for a temporary pullback in crude at least until May…  When the pullback comes it could be swift but is not likely to go much below $85 or certainly $80 which is the new”floor” set by our “friends” at OPEC.   With friends like that who needs enemies. Anyway, Terry Keenan was filling in for Neil yesterday who I hope is safely on his way to Florida for vacation.    

Have a group hug with Hugo!         

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Ok so here is my new blog and boy oh boy is it nice.  Look for regular daily entries starting Monday.   Meanwhile check out my brief appearance on Kudlow & Company last Friday!  Enjoy Assessing Crude Realities 

 

 An outlook on commodities, with Kevin Kerr, Kerr Trading International; Jim Awad, WP Stewart Asset Management ; Michael Pento, Delta Global Advisors, Inc.; Craig Columbus, Advanced Equities Asset Management; and CNBC’s Dennis Kneale.

 

http://www.cnbc.com/id/15840232?video=669483688 

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Hi from the chair as they say in TV Land. I am writing to you this morning as I broadcast Live on Fox Business with Alexis Glick. What is the topic, OIL! Here I am on set this morning.
Stay tuned!

Opec’s decison not to increase production is pushing crude back up and the bullish news keeps pouring in as the ADP report seems to suggest that more people are working and that means more activity and thus more oil consumption.

Hmmmm, we will see. Also in just a bit we will get this weeks inventory report. i expect to certainly see draws in crude and distillate and maybe a slight build in gas….maybe. If we get a bullish report we could see price ratchet up to $95 plus very quickly. Q4 is the biggest time for energy consumption, there is no room for error.

Ok well strap in and hold on tight today could be wild. One last note. The most concerning comment I heard out of Opec is that they no longer have a price target….For years they lived by the Price Band Mechanism…they raised or lowered output based on the price band, now they say they don’t have one…warning sign.

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