Christine Swanson

Sunday, February 13, 2011

Is Crude Breaking Down?

Ananthan Thangavel submits:

We commented last week on crude oil's recent fall after briefly skyrocketing due to fears of Middle East unrest. We believe that crude oil is becoming even more attractive of a long commodity position due to its recent troubles (click to enlarge image):

As can be seen from the chart, after the recent 2 day breakout during Egypt's political upheaval, crude has fallen back to exactly where it was before geopolitical issues sparked the rally. Even though it has fallen precipitously recently, we remain attracted to crude oil as a play on rising inflation and loose global monetary policy.

Fundamentals

We have commented at length about our belief in commodities as a beneficiary of the coming inflationary period. Inflationary policies enacted by the US, UK, eurozone and Japan are causing the loss of confidence in traditional major currencies, a phenomenon already underway. The European debt crisis, the US municipal debt


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Christine Swanson
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