Dow up 48 points! Woo hoo, party time, excellent…
Dr. Brett would probably know the proper term for this but it seems to me we are suffering from EXTREMELY low expectations, like a torture victim who falls in love with their captors because they don't beat them quite so hard on Thursdays.
As you can see from the video, like all things on this planet, it all comes back to Kevin Bacon. Much like every other actor in the universe is tied to Kevin Bacon, every stock in our little universe is tied to oil and once again our captors at the NYMEX put the screws to us by driving oil up $1.95 in yesterday's trading.
Oh, I should specify that the May contract went up $1.95 as 245M barrels changed hands leaving 361Mb scheduled for May delivery, 7Mb LESS than Tuesday, when oil was $4 cheaper. Wow, that demand is just soaring isn't it? As usual all this ridiculous pumping is being done for your viewing pleasure as somehow the July traders only have $1.30 worth of worry that Iran is going to start WWIII and Oct traders are only willing to pony up .97 and by next December there is just .34 being added to the price of oil so I guess the world will be full of peace and happiness by then.
For the second day in a row, contracts longer than 2009 are heading down in price – apparently we will have taken over Iran by then (although that plan isn't running quite so smoothly in Iraq is it?). But, just like Patty Hearst, we are willing to do join the party and drink the Kool Aid as the financial media goes on an all-out campaign to tell us that all is well while oil prices climb back to record highs.
Our own GAO jumped on the fear-monger bandwagon yesterday by releasing what some might call an "ill-timed" report (but T. Boone would probably call "perfectly timed") that postulates that IF we were to enter a period of peak oil (the whole concept is subject to debate) THEN the US is poorly prepared.
Well, DUH! Al Gore's been telling us to start getting prepared since we elected him VP in 1992 and then when we elected him President (by popular vote, which of course doesn't count) in 2000 before the Supreme Court (the majority of whom were appointed by Bush's Dad) decided that we should leave the election up to the political decision of his brother's home state (the brother that "guaranteed" him a win in Florida). Oops, how did we get on that topic?
Oh well, no sense crying over spilled oil is there?
Other than the Dow, our markets were fairly flat so I'm not going to bore you with the details here. Interestingly gold went down, which makes me even more suspicious of oil's spike but, as I said during the lunchtime oil pump: "There’s not much you can do to fight them, it’s very organized and very controlled, in my opinion someone is spending money on the NYMEX (it takes very little with just about $30Bn a day of total trading which results in net orders of perhaps 20M barrels on a very busy day) to dump energy positions."
That would be capitulation on my part. I remain very suspicious as it seems strange to me that oil goes up $2 for the day and XOM (who I've heard sell oil) goes up .68, even though they were $2 higher in December, when oil was only $64. The day after Thanksgiving, XOM gapped up from $71.50 to $74 and hit $78 by the next week as oil went from $59 to $64. So I'm a little disappointed that they can't get up over $76 on $66 oil – and after everyone worked so hard to get it up there too!
T. Boone's (who surprisingly ranks just below Hank Paulson on a list of Bush's biggest donors) Suncor also had a very muted reaction to near-record oil prices, which would seem very odd since all they really do is sell a very expensive form of oil. Yet they remain far below their December price of $82 so I am adding them to my cover list (again) along with COP, who can't seem to get it in gear despite the Warren Buffett seal of approval.
I'll be going into the weekend with pretty even puts and calls on oil but, if they can keep prices up here next week I will probably flip and use the puts for covers on a heavy call position. It's very sad but there's not much you can do when there is a coordinated global effort to drive up the price of oil while US companies shut down refining capacity and cut drilling budgets.
Don't get me wrong, I am quite positive it's a scam and all the evidence indicates that funds are bailing on the energy sector in record numbers while driving up the price of crude to cover their tracks, but that's the way the train is heading and as long as we know it's a crock, we can ride safely for a while until we reach the end of the tracks – which at this point look like a pretty nasty fall.
Are we ill-prepared for peak oil – you betcha!
