Thomas
DeChastelain
Memorial Archives

A Look at the Oil Complex
posted Aug 20, 2006 at 11:26AM

Crude Oil Daily



There has been some minor technical damage in that the break-out from the minor consolidation pattern has been negated and the crude price broke under its 50 dma with some authourity. All of the momentum indicators have rolled over.

In the bigger picture the bull case remains intact. The area between $66-$68 represents a strategic support level in that it represents the triangle break-out point, moving average and channel support.

As well if the price of crude went to there from here it would reach this area of support in oversold techncial condtions.

Crude Oil COT Data

XOI Daily





XOI Weekly



XOI Long Term



Obviously oil is no longer a contrarian market. I remain bullish even thought I am not a "peak oil" advocate. I think there is plenty of energy out there...it just humans are not doing enough to develop them.

Now I have been bullish for a long while and remain bullish but you can see that these are hardly optimum technical conditions for entry as far as sector charts go.

The breakout on the XOI remains intact and crude oil still lies above key support metrics. The Middle East continues to deterioriate. Iran is expected to come out with some kind of formal "response" and odds are good that they will not be genuflecting to US demands, especially after their "symbolic" victory/survival of Hezsbolah in Lebanon.

The COT data is not bullish, but then remember it was even worse in May and we have still chopped our way higher.

There are still stocks that offer very good value. Very few stocks are pricing in the higher oil prices which hints that there is still a wall of disbelief out there in regards to the bullish case for oil.

My portfolio consists of cash and a core position in the oil sands sub-sector.

Stocks/Commodity Ratio

Bullet Bullet Bullet