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Facts and Speculators

March 11, 2011 – 6:19 pm

Besides the Tsunami that is having the news media around the world ringing the bell of alarm, the bell at the opening of the stock market reflected the economic picture rather than anything else.

The retail sales report from the Commerce Department showed a rise for sales in February of 1% the eighth straight monthly gain and the largest rise in four months. January’s number was also revised to up .7% from .3% as originally reported. The various parts of the report were strong but the top line number was a little less than expected which was 1.3%. Of course they will likely revise February’s number in April when the report for
March’s retail sales comes in.

As terrible as this tsunami that hit Japan is, it appears the event is being used as an excuse to sell off oil as it falls below $100.

Oil has risen on the backs of speculators not on the fundamentals. The world has plenty of oil at this moment, but the excess supply is not abundant enough to prevent or reduce the influence of traders looking to make a quick buck.

Oil will spike up and fall sharply this year and it may do it several times but it should settle around $100 per barrel area for most of 2011. Expect higher oil prices in the future as there is just not enough drilling happening here in the U.S and elsewhere. Tight supplies in anything opens the door to speculators.

Good Trading
Steve Peasley

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