Thursday, May 6, 2010

Oil May Continue Plunging to $60

Bloomberg reports today that oil may continue plunging to $60 a barrel.

Jason Shencker, president of Prestige Economics LLC, a Texas-based energy consultant said that “The oil market is being hit by a double whammy,”

“The rise in the dollar is pummeling crude. Also, there are global growth concerns which have increased because of the credit downgrades in Europe and the Greek debt crisis.”

"Crude oil may fall to $60 a barrel in New York after the biggest three-day plunge in almost 15 months, while investors fleeing riskier assets pushed gold up toward a record.
Crude sank and gold surged yesterday as the Dow Jones Industrial Average had its biggest intraday loss since the market crash of 1987".

"An 11 percent drop has brought the front-month crude contract on the New York Mercantile Exchange down to its 200-day moving average at $76.37 a barrel. If prices fall below support at $75, “it could spark a $15 decline,” according to technical analysis by Jim Stellakis, an independent analyst".

Crude oil for June delivery dropped $2.86, or 3.6 percent, to settle at $77.11 a barrel yesterday on the Nymex. Oil touched $74.58, the lowest level since Feb. 16, at 2:45 p.m. as stocks plunged".

Disclaimer: the author has a sizable position in UCO puts and calls, so he is happy either way it goes.

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