So maybe austerity measures across Europe and the globe lead to less production and, thus, less transportation of goods. Is that reason enough for crude oil to drop below $70 per barrel? That means cheaper gas at some point, which is good, right?
USO (US Oil Fund) vs. SCO (ProShares UltraShort Crude Oil 2x)
Oil had plunged to $32 a barrel in December 2008 from $147 five months earlier as a U.S. financial crisis plunged the global economy into recession."The euro-zone's problems are a painful reminder that the global financial crisis has only been partly resolved by transferring it from the banking sector to the public finances," Capital Economics said in a report. "It would be wrong to assume that commodity prices will recover to their immediate pre-crisis levels as if nothing had happened in the meantime."Capital Economics said it expects crude prices to fall to $60 a barrel at the end of the year.
I haven't had the gall to short oil. I never paid attention to its expansive effect. It's complicated as hell. Who controls the flow? Howevaaah . . . if the coming months are a layout of crude destruction, I'll be willing to short oil via ETFs like DUG and SCO. Then again, the bearishness on crude is probably a tell and it could bounce from here, just like the Euro did on Friday.
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