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Brad's Desktop
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Written by Brad Zigler
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Thursday, 13 November 2008 12:41 |
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Oil analysts' target shooting doesn't seem to be getting any better. Yesterday's consensus predictions for oil and distillate inventories both overshot and undershot their marks (see "Oil Market: Wholesale Vs. Retail"). Crude stocks, according to this morning's Energy Information Administration report, remained unchanged, at 311.9 million barrels. Analysts were expecting a 750,000-barrel build. Gasoline supplies, forecast to increase 200,000 barrels, grew instead by 2 million. Distillate fuel inventories, including heating and gasoline, rose by only 600,000 barrels, well short of the prognosticated 1-million-barrel hike. Three strikes. But we're used to that (see "Oil Analysts Down For The Count"). U.S. Crude Oil Inventories 
What might have taken us by surprise, however, was a radical move in the gold/oil ratio. That's the gauge that measures gold's purchasing power in barrels of oil. We last looked at the ratio ("Gold Approaches Record; Makes New High") in October, just as the financial market meltdown began in earnest. Oil took a drubbing Wednesday, leaving the nearby NYMEX contract below $60 a barrel at the close, a level not seen since March 2007. The sell-off sent the gold/oil ratio to 13-to-1, above the 12.5-to-1 peak reached in January 2007, when crude was trading at $50. Gold/Oil Ratio 
Does this mean that traders might target $50 for crude now? Maybe, maybe not. The current ratio, lofty as it is, is not a lifetime high. The gold/oil ratio spent a good deal of its time above 20-to-1 in the late ‘80s and early ‘90s, even dancing briefly around the 30-to-1 level. Of course, oil was pretty cheap back then. Wait a minute ... cheap oil?
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i fully agree with the recent article by Mr.Brad zigar, but i want to pointed out that recession is always bad for commodities even though the supply is less i see gold and crude at US$590 and Crudeoil US$52 can go down at US$47 also dont know who factors the most ...but i had sell call at US$921 and US$131, and below US$108......