About Me

Retired chief investment officer and former NYSE firm partner with 40 years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Sunday, March 29, 2015

Oil Price

WT crude closed out 2014 in the $53 - 54 bl. area. The price experienced seasonal weakness in
Jan. and Feb. of 2015, and with a seasonal bounce in Mar. ended the week at $48.40. Further
seasonal strength lies ahead as refineries gear up for the major driving season. However, by
late April oil can enter a period of  modest weakness / volatility which can last through Aug.
WTIC weekly

So far this year the dramatic decline in the US rig count appears to have counterbalanced a
growing glut of US crude from fields using fracking technology. Trading volume in oil
has soared, but neither the bulls (those long on a fast declining rig count) or the bears (those
short on a growing excess supply) have been able to establish a decisive edge.

The oil price has very recently come out of the high speed crash downtrend it began in late
Sep. '14 but it is way too early to tell whether a solid bottom has been established in the mid-
$40's or whether crude can mount a significant seasonal rally over the course of Apr. The
oil market has not been able to hold above its 13 wk. m/a but may well challenge it in the
month ahead. WT crude is deeply oversold on RSI and MACD as well as against its 40 wk.

I have long strictly been a trend trader on the oil price so my position would now be on the
side line. The bottom panel shows the weekly action of the US dollar. I have been a bull on
the dollar since the early stages of the economic recovery (2009). Since my long term
projection for the USD remains 100 or par in 2020, I now see the dollar's recent sharp upturn
as rather extended and will be watching the buck carefully to see if  further corrective
weakness might lead to stronger positive action in both oil and gold. 

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