Is the crude oil still have the opportunity?
Let's review the history. In March 2008, under the background of the US subprime mortgage crisis, the Federal Reserve announced to save the market by cutting interest rates, which led to a large amount of liquidity and pushed the oil price up continuously. On March 5, 2008, the oil price exceeded 100 dollars, and then rose to the historical peak of 147 dollars four months later. He was expected to stay at the top for a while, but that didn't last long. He started back to $100 after September, then plunged to $36 over the next three months.
Given this year's rally in crude oil, with CPI hitting a 40-year high and the Fed's imminent interest rate hike, will it cause oil to plummet as it did in 2008?
We know that in January 2011, crude oil rose back to $100 on January 31 and hit a high of $128 a little more than a year later on the back of geopolitical tensions in the Middle East and financial crisis in the context of fed easing and debt crisis in Europe. From this aspect, we can see that the price of crude oil is not necessarily related to the federal Reserve's regulation. It's mostly due to geopolitical or war supply issues. Even though crude oil is volatile, we can expect to see a return to above $100 after the drop.
So by this logic you can see that the Fed is going to raise interest rates, and it's going to do so in its own expectation that it's not going to be affected by the high price of crude oil.
The normal logic from this technical move in crude oil should be that there will be a lot of short positions coming in and it will take a long period of volatility for the bookmaker to dissipate the confidence of those short positions. It is not impossible to suddenly start a correction when no one else is looking.
Let's review the history. In March 2008, under the background of the US subprime mortgage crisis, the Federal Reserve announced to save the market by cutting interest rates, which led to a large amount of liquidity and pushed the oil price up continuously. On March 5, 2008, the oil price exceeded 100 dollars, and then rose to the historical peak of 147 dollars four months later. He was expected to stay at the top for a while, but that didn't last long. He started back to $100 after September, then plunged to $36 over the next three months.
Given this year's rally in crude oil, with CPI hitting a 40-year high and the Fed's imminent interest rate hike, will it cause oil to plummet as it did in 2008?
We know that in January 2011, crude oil rose back to $100 on January 31 and hit a high of $128 a little more than a year later on the back of geopolitical tensions in the Middle East and financial crisis in the context of fed easing and debt crisis in Europe. From this aspect, we can see that the price of crude oil is not necessarily related to the federal Reserve's regulation. It's mostly due to geopolitical or war supply issues. Even though crude oil is volatile, we can expect to see a return to above $100 after the drop.
So by this logic you can see that the Fed is going to raise interest rates, and it's going to do so in its own expectation that it's not going to be affected by the high price of crude oil.
The normal logic from this technical move in crude oil should be that there will be a lot of short positions coming in and it will take a long period of volatility for the bookmaker to dissipate the confidence of those short positions. It is not impossible to suddenly start a correction when no one else is looking.
