Good point Alex.

Global oil demand is very strong, and global oil production is falling about 1 to 2 percent a year. For instance, Russia announced that their oil reserves did not grow this year as much as they had projected. And many oil producer countries are having a hard time developing new reserves.  This further tightens the world supply demand balance

openhurdle:

And what do you ignore? Basic charting interpretation... Listening to the markets and invest accordingly.

I don't listen to the markets. I tend to go against it. Remember that I was bullish on oil&gas in 2004/2005 when the market wasn't too big on it. I got out very early it looks like but what happened in the last few years is purely speculative. There was a reason to invest in oil&gas back in 2004 based on fundamentals (such as growing developing countries); right now, I'm not so sure. I think it's all speculation. Typically prices go up more during the final speuclative stages than near the beginning. Since you have profitted immensely from these, what I view as, final stages (within the intermediate time frame--I'm not talking about long term), you are confident enough to think that you are right. But usually those that are supremely confident during rapid price rises (+30% YTD for S&P 500 energy sector is big IMO) are the ones that fall.

And you do realize that technical analysis is even more bogus than anything I say right? It's working for you so stick with it, but in the end you'll see how bogus reading the charts will end up... there's a reason hardly any of the billionaire investors got there by reading the charts and using technical analysis... I suspect where the weakness of technical analysis will show up is if the trend changes or if we go into a bear market.

As far as energy being the best sector YTD so what? I have been wrong and I'll be the first to admit that but I see nothing to change my mind (don't forget that I was bullish on long bonds when very few thought yields will drop and guess how they have done lately? Long bond prices were near multi-year highs recently in US$ terms). I have mentioned many times that the oil market, like other commodities, involves a lot of speculation. A huge chunk of the price is due to so-called terror premium and things like that.

The fact that oil has done well lately even without any fundamental changes (no increased growth forecasts (if anything, they have been cut), no major hurricanes, no major terrorist damage, etc) simply tells me that it is possibly near the final speculative changes in an intermediate-term trend. Oil is the hottest sector so everyone was piling into it. If you strip out energy and materials from the S&P500, stocks haven't done so well. So I believe the momentum crowd are overweighting those sectors simply on speculative opinion.

Furthermore, historically, cyclicals trade at low P/Es during a peak (this is the case with most commodity stocks, including oil stocks). I know the market thinks that oil&gas, not to mention commodities, are growth stocks but they are not. When an economic slowdown occurs, all these will drop like a rock. Timing is the tough part for now...

I don't listen to the markets. I tend to go against it (Koala)

That’s why you've not made any money and most of your calls have been dead wrong. You're just an incredible individual, you've made wrong over wrong over wrong calls for months over anything and everything that has to do with markets, you even sold HMY and the day after you sold it gold sky rocket... For a contrarian play no one betas you.. lol lol

And yet, after all the wrong calls you still think to be right, and better yet, you give us crappy economic reasons for your calls... You're just incredible, there's nothing else to say

KB, there was a recent shock to the global supply with the explosion at the Mexican facility.  I know, its only an isolated incident.  But the point here is that supplies are quite tight.  So every time there is such a shock, everyone panics and buys more inventory...sending the price up.  While demand is tight, we will continue to see increased hoarding, and posturing to raise prices.  And no one seems to believe OPEC any longer, which was basically inevitable; as they continue to talk and not do much in terms of producing more oil. 

Alex...:

KB, there was a recent shock to the global supply with the explosion at the Mexican facility.  I know, its only an isolated incident.  But the point here is that supplies are quite tight.  So every time there is such a shock, everyone panics and buys more inventory...sending the price up.  While demand is tight, we will continue to see increased hoarding, and posturing to raise prices.  And no one seems to believe OPEC any longer, which was basically inevitable; as they continue to talk and not do much in terms of producing more oil. 

 

Ok then how come prices rarely ever come down when the risk dissipates? I know there is no proof to argue either side of this (this is generally the case when speculation drives prices) but don't you think a huge chunk of the oil price is based on pure speculation?

but don't you think a huge chunk of the oil price is based on pure speculation?
(Koala)

 

Do you even know what "Speculation" means? It means prices go higher without any fundamental reasons (both economic and technical) to be up that much. That's in a nut shell what speculation is all about. So if you believe Oil goes up ONLY on speculation you must believe Oil should be priced below $40 at least...

This is why I keep repeating you are VERY IGNORANT on the oil subject, because the fundamentals for oil to be priced at current levels are all there..