Blog > Oil and Energy > Record oil price result of panic-fed bubble
 | Email This Article Email This Article  | 

Record oil price result of panic-fed bubble

Posted June 7, 2008

Friday’s record oil price is the result of a panic-fed bubble, plain and simple: Supply and demand go nowhere explaining the move. Oil is making money because it is making money. Not the best reason for an asset to increase in price—but then, there are not really any bad reason.

by J. Christoph Amberger

Baltimore — (TFN): Based on negative reports on payrolls and unemployment, the Dow plummetted almost 400 points (or over 3.13%)… the Nasdaq lost 2.96%… and the S&P500 shed 3.09%. By any standards, this qualifies as a rout.

Was it the chicken or the egg? Oil prices posted their biggest single-day leap ever—clearing $139. Light, sweet crude for July delivery officially finished the day at $138.54, up $10.75 on the Nymex. After the settlement, the contract jumped as high as $139.12.

Now, here is where this movement makes little sense. If Americans are out of work, the outlook for both stocks and the economy is negative. Less things get bought, less things get made, less things get imported, less cars are sold… less people travel. But if less is made and less people drive and travel—why would oil be going UP?

Supply and demand go nowhere explaining the move. This is a panic-fed bubble, plain and simple: Oil is making money because it is making money. Not the best reason for an asset to increase in price—but then, there are not really any bad reason.

Profits in any market

TFN didn’t let the market’s downturn stand in our way to taking some gains off the table. We recorded a 17% short gain on PTEK: Get ready to cover our short stock pick PokerTek (NASDAQ:PTEK). And another 25%-plus gain on our long momentum play on SQNM: Take profits on momentum stock pick Sequenom, Inc. (NASDAQ:SQNM).

We’ll be continuing our TFN Momentum Plays in our daily Editor’s Pic next week… and should be quite immune to the fluctuations of the overall markets.

TFN Weekend Reading:

Peter Schiff: Dollar Bear torpedoes the Fed’s “Strong Dollar Policy”

Laura Cadden: The perfect recession-proof stock: TFN Hot Stock Pick of the Week

Brian Hicks: The $20 Trillion Report: The U.S. Geological Survey recently admitted, “It’s the largest continuous oil accumulation the agency ever assessed.” Today, just 470 miles from Helena, Montana, America’s greatest wealth boom is fast - and secretly - underway.

Thanks to a unique technological breakthrough, a group of scientists just unlocked the largest oil deposit in U.S. history… 503 billion barrels worth. And they can now extract it for just $16 a barrel. With oil breaking $120, news of this momentous discovery is already boiling over - at breakneck speeds. The three outfits leading the way each averaged 21% gains within the past 11 days. And they’re just getting started. To find out how each one could triple your money - this year - click here for your free report.

****Make sure you sign up for our FREE TFN News Feed for breaking news, special reports and new financial videos. Sign up through your favorite reader here. Or, if you prefer, have the feed delivered to your email.

Related Articles

    None Found

Posted by J. Christoph Amberger · Filed Under Oil and Energy 

Comments

close Reblog this comment
Powered by Disqus · Learn more
blog comments powered by Disqus