Finally oil holds intra-night gains to close green, with Crude Oil up 5.17%. Consequently the oil ETFs and ETNs had a good night. In addition, the oil stocks in the US that I have been following but not holding (CVX, COP and XOM) closed with reasonable gains. Hence, I am anticipating healthy gains with WPL and STO on Monday. Everybody seems divided as to which way oil will go from here as there are so many factors to consider. My opinion, which is simply based on reading articles rather than in depth analysis of FX, effect on GDPs, TA of CLF5, etc. is described below.
Short term, being the next 2 weeks, oil will see further gains in concert with the SPX xmas rally, which I anticipate will have up to one month to run. In addition, the fact that oil bounced off a 50% drop this week will provide confidence and perhaps limit downside risk to say 55.
Medium term, being 2 weeks to say 6 months. Very hard to judge as it depends so much on what shale oil does, what Russia does, perhaps a change in tactic by OPEC, how long the SPX bull market lasts, what the Fed does with interest rates, geopolitical issues, etc. Hence, at present I don't have a medium term opinion.
Long term, being say 6 months plus, I expect oil to recover to at least the June 2014 level of 100+.
The question for me now is whether to be content with simply holding the oil ETNs and stocks that I presently have, expand the volume on my present holdings, or diversify into other oil entities. I am warming to the relatively good yield stocks like CVX, COP and XOM, and now wish I had acquired some of these earlier this week.
