Monday, April 11, 2011

Where will the Price of Oil Go?

Nobody really knows where the price of a barrel of crude oil will go to. I find it amusing that people rely on what somebody says to determine a trading strategy. Once you expose yourself to the consequences of uncertainty by entering a trade then all you can do is manage risk and determine where you will take a loss if the trade goes against you or where you will move your stop if the trade goes in your favor. Yes if you are a longer term trader then you can gain expectancy bias by getting a win rate % that is positive by backtesting your datasets. Remember you can have a win rate % of 30% but if your average win is $3 versus an average loss of $1 then you still make money. Fundamentally if the Federal Reserve continues it's electronic money printing then commodities like oil will continue to move higher. This has been the case for the last decade on the average. I posted the dollar index chart and a chart of crude oil to illustrate my point. My guess is that oil will go back and retest its 2008 high of $147 a barrel. I believe oil will go even higher. The market will work this out on a daily basis and it will be reflected in price. A man's idea can't be quantified but price of a commodity like gold, silver, and oil can be. The trend is your friend and these commodities are all moving upward.

2 comments:

Tiger Blood Warlock said...

The only way to "control" the price of oil is to reduce demand. The gov't needs to quit wasting money on funding illegal wars in regions to protect our oil supply and start spending that money on research and development of alternative energy sources. The gov't could get the economy back on track easily with a two-part plan: (1) reduce defense spending by 75%; and (2) invest money in new energy to rid our dependence on oil and coal. This plan is will reduce debt, create jobs, and help the environment and public good. Checkmate.

Charlie Sheen's Mom said...

TigerbloodWarlock (AKA AT JD) Many people close to the oil industry like Ken Fromm of Atlantic Richfield oil company which was ARCO believe north of Prudhoe Bay in Alaska that there is enough oil to power the US for 200 years. Mr. Fromm is recently deceased but that is what he was saying.