Wait for the January Swoon
When you're trading in an asset that has seen prices range from $150 to $33 per barrel since 2008, timing is everything. That move in crude represents $117,000 per futures contract, thus proving this market to be one of the most lucrative among commodities, but also among the most treacherous. As tempting as it might be to chase prices higher into a rally, it can often be a painful lesson in market timing.
If we take a quick look at the fundamentals, we'll see enough reason to justify why crude bulls on the sidelines should wait for a respectable pullback before they buy. Seasonal tendencies offer convincing support of this theory, as well. Crude-oil prices have benefited from higher equity prices, commodity traders take as a sign that the economy is growing -- and, therefore, that energy demand will rise. However, domestic inventory has been on the rise. U.S. wares are currently believed to total about 360,000, well above the five-year average. Yet, crude prices continue to float higher on the possibility of future demand, rather than moving on existing market fundamentals. ...464 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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