This Isn't the Time to Be Short Oil Prices
NEW YORK ( TheStreet) -- If you're looking for a trade on oil prices, you have two choices. Being short oil isn't one of them, however.
President Obama and the British government have dropped hints about tapping strategic petroleum stockpiles. The Saudis are trying to reassure the market that they will step in and do what it takes to supply the world's oil needs. Even so, being long oil, or at the most bearish, on the sidelines with the trade, remain the only wise options for investors. The Middle East geopolitical risk premium will continue to trump short-term counterbalancing actions, as well as trump the longer-term risks about a global slowdown.
Crude oil prices dropped on Tuesday after Saudi Arabia said it is ready to meet any shortfalls -- perceived or real -- in global oil supplies.
Brent crude - the base for gasoline prices - fell 1% to under the $125 mark at midday Tuesday, while WTI crude fell almost 2% to $106. Oil prices had hit a three-week high before the Tuesday decline.Obama is scheduled to speak later this week at the Cushing, Okla., oil hub for WTI crude, and there is speculation that the government will tap the Strategic Petroleum Reserve (SPR), though the White House denies it. During an election year, Obama is in the least using the Cushing backdrop as a photo-op to highlight his administration's sound bite that that they have overseen the largest increase in U.S. oil production in 16 years. Even if the government were to tap the SPR, traders and energy analysts believe it would have a short-term, ultimately
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV