22 Dollar Oil, is it still on the Table ?
With all the talk about commodity bottoms occurring in Oil, Copper, Grains, even the precious commodity Gold, it may be time to take a look at one of these markets.
Back in our blog of February 10, 2015 we mentioned the potential of $ 22 oil by 2017. At that time oil closed at 56.60, today it is around 47.00. All we can say is that it is highly unlikely that oil has bottomed, so $ 22 remains a real possibility going forward. One reason is that the long tail of bullish attitudes remains with the market, just look at the relationship of the two oil ETF’s USO and XLE, XLE recently traded at 5.0 times USO, an all time high. What that says is the bulls still are still around, when oil does really bottom, USO will lead by gaining on XLE by a wide margin.
And just to look at the public face of commodities, yesterday on CNBC, Dennis Gartman said he was looking for a $ 44 to $ 75 range in the period going forward. There will probably be a lot of stops at $ 42.90 on that trade.