Oil Reaches A New High - Time For A Correction or $120 Oil?

by BWK ~ March 11, 2008

Some more commentary on yesterday’s correction talk, only this time in terms of Oil… Here is what my collegue Kevin Kerr thinks:

I agree with Bob 100%. In fact my appearance on Fox News yesterday echos the same sentiment about oil. We have seen a parabolic rise in oil prices in the last few months, daily record high after daily record high. Now at $109. Clearly the (current) supply levels globally are ample for demand and this is Q2 which always sees a slowdown in demand and a shut down of refineries to retool for summer and for maintenance. Let’s hope they are doing that maintenance because we will need all the refineries we can get.

The fact of the matter is we are on the high end of this range right now in my opinion. Sure it could spike to $120 but it would never sustain it right now. Truth be told I expect crude now to pullback and test $90 or lower (possibly)…Fox likes $80 cause it sounded good.. so there’s some objective news for you…

Remember this is all in the context of oil resuming it’s climb in the summer or certainly by early fall…We need the correction and it will be led by profit taking then capitulation of the longs and then (the really stupid people) who will once again go short on the lows as they dream of a return to $60, ain’t gonna happen.

OPEC has already said they will defend $80 crude, and they will. Heck if they won’t pump more at $109 do you think they will at $80. SO as you view this interview (and as I point out at the start of it) There are two views…The investment view (longer term which is more than a few months) and the trader’s view (3 months or less) they are very different. Good time to grab some profits on high flyers in the energy patch and metals…just as we have done in RTA recently. Wait for the pullback which is already starting and then buy when the bears start shorting agressively.

See a Video of Kevin from Fox News “Your World” either at His Blog or on Youtube. Kevin is also a contributor to Whiskey and Gunpowder, check out this special report on peak oil.