Oil Volatility Continues
As you know, 2007's trading has clobbered oil...
First thing this morning, I wrote in Radar that the market was opening lower due to oil prices that were jumping $1.20 in early trading.
As you know, 2007’s trading has clobbered oil -- dropping 7.8% in last week’s trading alone. But this morning, crude-oil futures ticked back up after Saudi Arabia announced that starting in February it will cut 158,000 barrels of oil per day, in addition to the 380,000 barrel-per-day reduction that the country agreed to in November.
Early on, this production cut looked to offset the warm weather we’ve experienced so far throughout the United States. But as the trading day progressed, the volatility we’ve witnessed in the oil sector came right back into play. By mid-day, oil completely reversed -- tuning its early session gain of $1.20 into a loss of $0.40 a barrel, pushing prices as low as the mid-$55 per barrel level.
As a result of this oil volatility, the Dow seesawed throughout the session -- trading as low as 57 points and as high as 33 points.
Rest assured: There will be a time when the United States gets hit with a cold front and oil prices jump back above $60 a barrel -- which is why it’s probably worth the speculation to add longer-dated oil call options at this time -- while prices are still low on a one-year historical scale.