I was watching Bill O'Reilly last night bash Exxon for tripling their profits while consumers suffer. On the other side of the interview was former GE chief and pampered retiree, Jack Welch. Now that big energy companies are in the spotlight, the pressure to bring down prices are enormous in order to deflect criticism.
While this criticism will probably be successful in bring the price of oil and gasoline down, not much can be done to control the price of natural gas as we head into the winter months. In any event, it looks like oil prices are at a technically critical point.
The price of crude has been stuck in a trading range of roughly $71 to $63. Within this range the price of oil continues to narrow. A break above $68 will signal higher prices, while a break below $63 could mark the beginning of a bearish pattern. Our first target on a break below $63 would bring the price of crude down to $55.
In light of all the hurricane's and hoopla from the media after the recent storms, investors will be reluctant to believe that lower prices can occur. Don't bet against it. This is where Wall Street separates the men from the boys.
While no one actually knows what will happen, my contrarian bones are telling me to be alert for a counter move in energy prices.
Pressure is not just coming from the media. The President's poll numbers are scraping along the bottom, Airlines, Auto Companies, Truckers, Retailers, Industries and consumers are mad. In addition, Investor Sentiment is reporting that 64% of investors are bearish, versus 15% who are bullish. Somethingç—´ got to give, and my bet it will be the price of oil.
