OIL WHACKED LOWER AGAIN
January 9th, 2009WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
That oil trade I did is solidly in the red now, but I am taking the long term view on this one.
IT’S OIL.
Unlike trying to pick bottoms on companies (which have the potential to go bankrupt), oil is not going away. As both demand and prices collapse, energy producers are going to falter. Investment in infrastructure and exploration will be curtailed…
Let it keep going down. I’ll buy my next load at $30 if it gets there.
It is very counter intuitive to buy a thing that’s going down.
Nibble at it. Average in slowly. Diversify.
Look around. Just about everything you see is made out of oil.
For whatever it’s worth, diversification to me means, my family’s small farm, bulk food, livestock, heirloom seeds, tools, cash, physical gold, food commodities (DBA) and now a little bit of oil (USO).
Via: Bloomberg:
Crude oil fell below $40 a barrel in New York after a report showing that the U.S. unemployment rate surged in December raised concern demand will drop faster than OPEC makes production cuts.
Oil dropped as much as 5.6 percent after the government said the world’s biggest energy-consuming country lost 2.589 million jobs last year, the most since 1945. U.S. supplies have climbed in 13 of the past 15 weeks as the economy slowed, according to the Energy Department. Prices in New York touched $32.40 in December because of rising stockpiles and lower demand.
“We are going to test the December lows because the numbers we see are horrible,” said Kyle Cooper, an analyst at IAF Advisors, an energy-consultant in Houston. “It seemed that Russia, China, India and Brazil were immune to the economic problems here, but that’s no longer the case.”
Crude oil for February delivery fell $2.16, or 5.2 percent, to $39.54 a barrel at 11:08 a.m. on the New York Mercantile Exchange. Oil is heading for a 15 percent decline this week after gaining 23 percent the week before, the most since August 1986.
The U.S. jobless rate rose more than forecast to 7.2 percent last month, a 15-year high, from 6.8 percent, according to a Labor Department report today in Washington.
Look around. Just about everything you see is made out of oil.
Well, anything that is not real wood, metal, glass, or ceramic. Looking around my cluttered little apartment, it is vanishingly few things that are made of those materials I just listed. The carpet in here is doubtless made of oil, as is the upholstery on the second-hand living-room chair that’s full stuff because I never sit in it anymore, and probably so is the fabric and padding of the computer chair in which my ample posterior is presently seated. Also, many of the chemical compounds we use in our daily lives are petroleum derivatives. When I look at the ingredients on my Head-and-Shoulders 2-in-1 shampoo-conditioner for oily hair, for instance, I see a bunch of stuff some of which are certainly petroleum derived.
Yikes! Apologies for tag-closure failure in prior comment of mine.
hi K.
imho, you should correct your diversification statement: you hold two types of gold: one yellow, one black.
oil resistance 50 held. 1st test 43.75 support failed. I expect 37.50 next test on oil, barring any regional involvement in the ME, or Russia / Ukraine goes hot.
There are only two weeks left until the o-bot goes live: lotsa oil tankers out there with lots o’ black gold on ’em … maybe biden may be right, yet.
… snark …
c
oil is not going away
Of course we are an oil-dependent world. But will this be true even if there is no bottom to this “recession,” if it is really the collapse? Doesn’t it take immense infrastructure to drill, ship, process, further process, and ship the stuff again?
I’m not trying to be smart or anything, just genuinely curious as investing in commodities is something that I’ve just recently started to learn about.