Remember when $100 per barrel crude was a big story? Wondering when $110 crude will be the headline? In overnight trade on Nymex last night, crude traded at $109.72. But, in a conversation the morning of Monday, March 10, Timothy P. Evans, energy analyst for Citi Futures Perspective, offered a contrarian argument with some interesting and well grounded comments on the run-away market.
Here are some highlights:
“Fundamentally this is a bear market. It’s a market that is drawing a flow of buying on issues that are not directly related to the physical crude oil market, such as the weakness of the U.S. dollar and broader inflation expectations. So we are using crude oil as a hedge against a weaker dollar and as a hedge against inflation; and that’s why it’s $107 per barrel. We don’t have tight inventories; we have gasoline inventories at their highest level since March of 1993. And apparently, that is not enough inventory to turn the market lower. And so to my eye this looks like a bubble.”
