Thursday, January 5, 2012

Charting Light Sweet Crude and The Coming War

I thought with the recent surge in stock prices why not take a look at the correlated move in oil moving over $103? I guess the threat of war is a catalyst across all sectors. You know, one tide raises all ships kind of thing. Maybe the world's debt and credit issues worsening are the reasons for the market's advance today (that is a topic for another post).

I would not be doing this if oil was not at a technical point that did not matter (more on this below). I'm pretty sure none of this matters with the Iran situation following the Libya disruption, but you need to see what's happening in the charts.

Adding to the "why do this post when technically nothing matters" theme, I believe that oil has become one of the most manipulated commodities on the planet making millions for the likes of JPM, GS and the oil conglomerates. Bottom line is (thinking realistically and with some sort of common sense) it makes no sense with the global economic slowdown and consumption that oil is priced anywhere near these levels. Peak oil fears? That is an argument for another post.

Thinking along those lines, and if you doubt my manipulation claims as conspiracy theories, then read this, "Many see the price variations as a ploy on part of the oil companies to boost profits rather than in keeping with the market trends. The FTC investigation was triggered due to the fact that the oil industry displayed major profits despite claiming decreased usage of capacity." FTC Investigates Oil Price Manipulation. Then read Oil speculators made $50 million by manipulating price: CFTC - May. 24, 2011.

It is all about speculation in the price of oil and has nothing to do anymore with consumption. It is all about how many billions can be made no matter the expense to the consumer or what residual effects this has on the well being of those that live on the planet. It is about big money and little regulation in the trading of black gold.

UPDATE: "And as for crude going to $250 - yes, it may cause huge headaches for regular folks but for banks it means record bonuses, and as a reminder, the Fed works for the banks, not the people, pardon neo-feudal debt slaves..." Complete Cheatsheet For What To Buy Ahead Of QE3 | ZeroHedge

Want to lower the price of oil? Remove the speculators and allow only those with skin in the game, those that actually use the stuff, to play the futures. That my friend would bring oil back down to a reasonable price. That is not possible though cause your politicians that control all the regulation would really piss off the special interest groups that own the politicians. Sorry, big money wins again.

Lets look at some charts for the /cl Light Sweet Crude futures just for fun.

Monthly - Here the first thing you notice is the unprecedented rise to $147 back in '07. Times were so good that they could not contain themselves I guess. The second thing to note would be the price of oil in 1998, that would be $10.65. And now how do you separate manipulation from reality? The MSM spews that an average price of $85 is now necessary for most oil countries to maintain their entitlement programs. And things are not inflated now? Really? Think about that for a bit. Note that upper green resistance diagonal, it will come up later.

Just for fun I'll throw in a chart of the dollar to make you really sick. The math here does not work, and they say things are not inflated. Folks, oil running up and the dollar falling, that's not a good thing.

Back to oil. Here is a weekly chart. A closer look at the controlled channel rise off the bottom in '08 to the $114 high last year. Note that channel. More on that to come.

And Daily - The real technical reason for this post is here. Remember that upper green resistance diagonal from the monthly chart above? Look just above price now. Remember that yellow channel off the '08 lows to the $114 high from the weekly chart? Look just above price now. Well that channel busted late last year and is in the process of being backtested (just under long term (green) resistance). Folks that is a technical brick wall that can only be busted by ....a war.

So we have two things building, either oil and the economy are about to collapse. That is an argument that I can make and win. But the globalists and central planners can't have that. They are making way to much money and face losing billions if things go the wrong way. We can't have that. So, guess what's coming? Yes, a war in Iran would be very beneficial for those in control and oil will probably be going to a minimum of $150 pbl again.

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