Past performance is not indicative of future results

Here is a look at Crude Oil over the last 3 years.  I have circled the crossings of the 50 day moving average with the 200 day moving average. These are known as the “Golden” and “Dead” crosses.  First, we see prices come off from the previous all-time high of $79.86 back in July of ‘06.  The “Dead cross” happens as the 50 day trends lower than the 200 to make a new year low of $51.03.  The next year and a half saw prices steadily climb to the all time high near $147 a barrel.  This was followed by a sharp plunge from the all-time high to a new 4 year low of $35.13 in less than 6 months.  A loss of 70%+ in 6 months!  This was possibly due to the shrinking US economy with lower Gross Domestic Product and lower demand for oil.  Supplies for Crude are at their all time highs; could we see lower crude prices in the future?  It is possible that we could see Oil keeping up with its downtrend into the low $30’s and/or high $20’s.  OPEC has cut production numerous times but it has not affected the price much.  With many tankers around the world storing crude oil, we might end up with no place to put this oil – which may possibly drive prices lower and lower.

Trading in futures and options involves a substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.