Here at Black Gold we believe it is time to put our toe in the water and go long crude oil at current levels. We are initiating a SMALL long position and recommend buying tonight or at the open tomorrow if crude opens at current levels or lower. We recommend buying crude oil about 1 year out on the curve in order to avoid the large front month contango caused by the inventory situation at Cushing, OK where inventories are at multi-year highs.
We would recommend buying crude oil for delivery anytime from December of this year to December 2012. As this is just a starter position we recommend buying 1/4 of a full position tomorrow and keeping plenty of cash available to buy more if crude goes lower. We believe that crude can go lower but that downside is now limited by OPEC production cuts (which we expect to be imminent even if not announced) and structural increases in Chinese demand driven by the massive auto sales of the past two years. These two factors should rule out any significant downside below $60 per barrel. While we think that oil could fall a few more dollars we don't want to be too greedy and will start our buy tomorrow with the intention of buying more if get into the mid 60's.
Wednesday, May 19, 2010
Tuesday, May 11, 2010
China on pace to sell 18-20 M autos in 2010
Auto sales in the first four months of the year put China on a pace to sell 18-20 million autos this year. Don't let anyone tell you this isn't massively bullish for oil demand.
Attached is an article from Xinhua news agency with more detail:
China auto sales up 34 % in April, growth slows
Sales of automakers in China climbed 34.37 percent year on year to about 1.56 million units in April, the China Association of Automobile Manufacturers (CAAM) said in a statement Monday.
However, April sales were down 10.37 percent from March, said the statement, without elaborating.
The April figure brought the combined sales in the first four months to about 6.17 million units, up 60.51 percent year on year.
Sales of passenger cars rose 33.21 percent to 1.11 million units, lifting the four-month sales figure to more than 4.63 million units, up 63.64 percent. However the figure for April fell 12.18 percent from March.
The Chinese government slashed the sales tax on small cars to 5 percent from 10 percent last year in a bid to boost domestic consumption.
This year, the sales tax has been set at 7.5 percent.
The CAAM statement said Chinese automakers produced more than 1.56 million vehicles in April, up 34.61 percent year on year
Attached is an article from Xinhua news agency with more detail:
China auto sales up 34 % in April, growth slows
Sales of automakers in China climbed 34.37 percent year on year to about 1.56 million units in April, the China Association of Automobile Manufacturers (CAAM) said in a statement Monday.
However, April sales were down 10.37 percent from March, said the statement, without elaborating.
The April figure brought the combined sales in the first four months to about 6.17 million units, up 60.51 percent year on year.
Sales of passenger cars rose 33.21 percent to 1.11 million units, lifting the four-month sales figure to more than 4.63 million units, up 63.64 percent. However the figure for April fell 12.18 percent from March.
The Chinese government slashed the sales tax on small cars to 5 percent from 10 percent last year in a bid to boost domestic consumption.
This year, the sales tax has been set at 7.5 percent.
The CAAM statement said Chinese automakers produced more than 1.56 million vehicles in April, up 34.61 percent year on year
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