Swimming in Crude
Research for Online Investors

by John Dalt

7/29/09

Crude oil, we are swimming in it!  The market acted that way today.  After the crude oil inventory report came out this morning, you could have shot a gun and not killed an oil buyer in the pits.  Crude dropped more in one day than it has since April.  What caused all the panic?

Crude oil inventory jumped 5.1 million barrels in one week!  This takes us back to the inventory levels released the first week of July.  Gasoline and distillates (diesel fuel, heating oil, jet fuel) had been building and refinery utilization has declined.  The pipeline is full, and we need usage to ratchet up.

On the positive front, gasoline inventories declined 2.3 million barrels last week, but distillates inventory continued to increase.  Distillates inventory increased by 2.1 million barrels.  If you burn heating oil for heat, you may want to consider contracting for this winter’s usage.  Distillate inventory sits 32.1 million barrels higher than last year at this time, almost a 25% increase.  Distillate inventory has been growing every week for over two months.

What do we do?  Wait for the market to settle down, and watch for one of three events:

• A Storm in gulf
• A Terrorism scare
• Improving Market sentiment of world economic recovery

I have beat the drum that crude oil is the trade of the year for over five months now.  Buy on the dips, be patient.  However, don’t think it is going to be cheaper six months from now.  That would be dreaming.  Remember, hope is not a trading plan.

Thanks for the response to yesterday’s missive on health care.  I hope some in Washington pay attention.  It sounds like the “Blue Dog” democrats are just democrats.  They have caved to Pelosi for some fringe changes that made our heart flutter, until we realize it still nationalizes our health care.  Freedom, fly out the window!

Subscriber W.H. wrote,
“All good points.  You were a County Commissioner?”

Yes, in another time, when I thought you could change the system. If you ever want a disappointing experience, run for public office.

We did lose one subscriber from the article; I guess they did not like my idea on deporting illegal aliens (after we treated and stabilized them).  I thought it was humane.

New home sales rose for the third month in a row last month.  According to the Commerce Department, home sales rose 11% in June, the largest increase in over nine years.  The housing market may be bouncing back from the worst downturn in decades.  June’s was the strongest sales pace since November 2008, exceeding economist’s expectations.  June sales were recorded at a seasonally adjusted rate of 384,000, still 21.3% less than a year ago.

The market is either consolidating to go higher, or drifting lower.  I think we still have higher to go; the market still seems to be ignoring bad news.  The announced agreement on health care reform may push us over a cliff.

We have started a new service called “Ask John”.  Send us your best question about investing to john@galtstock.com I will answer the best questions every week on video and post them on the website.  You can access this service from the top info bar on the far right.  We have also moved the newsfeeds to the bottom of the home page.  I use this every day to catch quick reads on news stories.

I hope you are making money in this market; the SwingTrader has closed eight winning trades this month.  Why not join?

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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