RSSA Giveaway Oil Market
By Brad Zigler | October 07, 2008 | 12:39 PM | 0 Comments
By now, everyone should realize that markets taketh away what they giveth. And, th-uffering th-uccotash, did the markets taketh way in this week's opening round. Yesterday's fresh insult sent capital looking for refuge in Treasuries and gold and out of stocks and commodities, most particularly, crude oil.
Remember crude oil? Remember how its barrel price was on a trajectory for $200? Well, now the U.S. government's Energy Information Administration is forecasting - barring a wholesale global economic collapse, mind you - crude prices to average $112 a barrel in 2008 and 2009.
I know you saw spot crude settle below $88 yesterday, but that still left the benchmark's year-to-date price at $113 a barrel. And, if EIA forecasts are to be believed, apparently headed a dollar lower.
Spot Crude Oil Prices Vs. Quarterly Backwardation
The mathematical prospects for bringing the average down a buck are intriguing. If prices flatline from here - $88 a barrel - through New Year's, we'll end up with an average price of $107, well below the EIA forecast. We'll need to average about $109 a barrel to finish out the year on the government's target.
So, should you buy crude now, hoping for an $11 pop?
Well, keep in mind that the $112 forecast is being made by the same government that brought you monetary inflation of 10.7% to date this year.
U. S. Monetary Inflation Vs. Gold Price
Want to call your broker now?
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