Anorak News | Tradefair: Punters Take Oil To Push Bear Equity Market

Tradefair: Punters Take Oil To Push Bear Equity Market

by | 23rd, May 2008

THERE are 42 US gallons (34.972 Imperial gallons or 158.987 litres) in a barrel of oil.

A barrel of oil now cost about $135. That’s more than twice what it cost a year ago.

US crude, the benchmark light, sweet crude contract, hit $135.09. In May 2007 the same contract cost $65. Someone is making big money.

The UK’s Brent crude set an intra-day high on Thursday, peaking at $135.14 a barrel.
Few of us beyond survivalist cults in the US and John Prescott will have stocked up on actual oil, filling our swimming pools, sinks and Tupperware with it to keep our Chinese takeaway hot and endure a nuclear winter.

But you can buy oil on the Tradefair spreads. The spread on Brent Crude is 130.59 to 130.64. Given the tracks record, a buy is the temptation. Oil prices have set new records in 10 of the last 14 trading sessions.

Buy or sell?

“You really cannot forecast how much further the market will rally now,” says Tatsuo Kageyama from Kanetsu Asset Management in Tokyo. “All I can say is the market will continue to rise.”

Commodity prices are impacting on the markets. Gold is trading at $913 an ounce. The Tradefair August gold spread is trading at 922.9 to 923.6. A ten point gain is not beyond the realm of possibility.

And all this commodity buying is lifting the equity markets. The FTSE 100 has gained just under 5 % over the past three months.

It is believed that a lot of the bad news on the credit crunch is already known, and that the worst is over.

Any rise in the FTSE has the appearance of a bear market rally, and punters should remain tight on indices…

Posted: 23rd, May 2008 | In: Money Comment | TrackBack | Permalink