Crude Hits The Skids
Jan 28th, 2009 | By Doug Casey | Category: Financial NewsIn the energy market on Tuesday, oil plunged, with crude for March delivery closing at $41.58, down $4.15. March reformulated gasoline was off 4.46 cents, to $1.1085/gallon.
The market reacted to the ongoing grim stream of economic data, raising worries that demand for petroleum products isn’t going to turn upward anytime soon.
Also playing in was widespread sentiment that inventory figures, due out today, are going to show heavy builds.
Hoarding continues. The price of oil for delivery next December is 29% more than for the current month, creating a larger-than-normal contango, the opportunity for traders to profit from storing crude for later use.
“Inventories will continue to rise as long as the contango is in place,” said Bill O’Grady, of Confluence Investment Management in St. Louis. “It pays to purchase oil now and put it away.”
However, “We are seeing some oil being removed from floating storage, which is a sign of tightness in the market,” said Lawrence Eagles, of JPMorgan Chase (NYSE:JPM) in New York. “The OPEC cuts have brought supply and demand close to balance.”
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Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.