Headlines in all the major business sections lead off with the price of oil. Currently trading at 129 for July. On top of that, the talking heads on the financial stations are now talking of the contango in the oil futures mkt. Dec. 2016 now at 140$ with increasing open interest. This could be the beginning of the super spike that eventually crushes demand-just like gold and silver in 1980. I expect margin requiremnts for future contracts to start increasing.
Related news. Petrobras is ordering $30 billion in deepwater rigs for their recently discovered off shore oil firelds. In addition, PBR has locked up 80% of the deep water rigs (16 of 21) for the next several years. Looks like future oil is going to be more expensive that oil 5 yrs ago. The oil mkt is trading similar to the gold mkt as it breached the 1000$ level. Once the upward momentum wanes, it will crater and find its true level around 105 to 110. 95 to 100 is the max downside I see.
Refiners are starting to trade better. Either gas prices are going higher, or the cost of crude is going lower. WTIC is trading at a discount to its normal relationship with Brent.
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