Why Oil had to go down, fundamentally speaking.

As I have mentioned before, I focus on charts, showing signs of whats about to happen way before the fundamental news come out. But let me explain a little of fundamentals of oil prices rise and fall.

Disclaimer: Trading futures is risky, you could lose all your money,your pants, your shirt, all of your ego, and all you mind, or what's left of it, after reading the article below.

As many of you no doubt know of the petrodollar, this was something created in the last century. Or that the world has to buy oil in dollars, they can't buy oil in pesos, kronors, or thai baht, neither can they barter if with says goods, such as weaving baskets, sandals, or even fish, these are the rules, nothing fishy about this.

Therefore, and I can't go into it now, but when the $ goes up say 10% and the oil demand remains the same, oil prices will go down. You may find some, videos on the internet explaining this phenomenon, or one day I may set up some seminars at a hotel in Vegas, going into more details.

So when $ prices go up 20% the oil prices would need to go down 20% but only in other currencies, usually this is how it works. However, if supplies decrease then even if the dollar goes up, and normally oil prices should go down, oil will go up too, this is a lot to swallow, but some virgin olive oil it might help.

Ok, so as you know since Jan 2018 the Dollar has been going up, however, oil went up too. Now that the world sees no problem with supply, oil prices will need to catch up the the up move up in the $ and go in the opposite direction. Now if Einstein was alive he would tell you this is not a clear science. So that is all that is happening now, and why the oil prices will slowly come into, the equilibrium price. So lets look in the past and see where oil prices where, last time when the $ index was at its current prices of today at about 95, and maybe that would give us some indication of where the oil prices would be headed. This is not a science like gravity but maybe more science like the density of meat gravy is, but it is close, However the math in gravity science is a lot more complex, although maybe not as tasty as meat gravy.

if you remember I said we could see oil prices eventually at 52, that is my target.

Well lets look back in history, at about Jan 2015 the $ index was at the price was where it is today at 95, look at Jan 2015 for oil prices and you'll see oil prices where $52.

Just my humble observation, some of you asked how I know what I know, first of all I know what I know, and I know its not much. 

Hope this helps, if it doesn't wait for my Vegas conference, (just kidding)., but if you buy my a ticket to Vegas, or even Cayman Islands maybe we can do a 1 on 1.

 

 

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