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Last Tuesday, I told Material Profits subscribers the following:
“I thought we might see [oil] prices retrace a bit, but they’ve done so in a rather authoritative fashion these past two days. I noted that we could see moderate support at $72.50 and very strong support at $70. Well, we blew through $72.50 without even a pause, and now we’re down near $71 and some change. That’s a huge chunk to swallow all at once. It’s sent traders scrambling for the doors, but I’ve no doubt some folks made a lot of money. But I think we’re likely to see oil prices buoy higher over the next several trading days. Perhaps back up to that $72.50 level I was telling you about.”
It appears as though $70 a barrel is providing strong support. On Friday, September oil futures dropped as low as $70.10. Monday, they bounced as high as $73.19, and today, they’re trading around $72, give or take.
And that brings me to the question I’ve been asking folks… For the past few months, I’ve been saying oil prices will be about $76.50 on Labor Day. That huge drop last week could prove me wrong, but seeing this bounce with strong support gives me a bit more confidence.
Randy K. wrote, “I think your price of $76.50 is still valid, even with the pullback, but since I get to pick AFTER the pullback and we only have 3 1/2 weeks to go, I will come in at $75. Bottom at $70 and start the slow retracement before the fall pullback.”
Now it’s your turn to predict. Send your forecast for where oil prices will be on Labor Day to e-news@taipanfinancialnews.com.
S.R. Nunnally
Editor, Material Profits
P.S. Technically, oil could trade anywhere between $70 and $78 over the next few weeks. A push as high as $78 could pull oil stocks a bit higher, but not significantly. Expect a bit of waffling from oil companies.
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