Two Ways To Play: Anxious OPEC May Cut Production
Strengthen your portfolio in good times and bad.
OPEC said in a statement today, "The Organization is concerned about the deteriorating economic conditions with contagion risks," and at the meeting it will "discuss the global financial crisis, the world economic situation and the impacts on the oil market." Some believe OPEC will cut production by about 500,000 barrels a day.
At 1:13 PM Eastern Time, crude oil for November delivery traded at $86.80 a barrel in New York, down $2.07. Crude prices have fallen 40% from their July record off $147.27 a barrel.
See Professor Lewis' Minyan Mailbag: The Gold Disconnect for more on the topic.
From the Bull Pen: As Professor Lewis mentioned, the selling in oil and commodities is most likely due to flight from counterparty risk. "If there's all this demand destruction, then where are the physical inventory builds?" he asks. Bulls attempting the upside can use the oil ETF (USO) with tight stops near the $70 level.
From the Bear Cave: Bears are nervous shorting in this market given the recent massive selloff. So one can stand pat. But if commodities have a sharp rally, expect restaurants and retail to continue to underperform.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter