The problem with USO is fundamentals have so much influence and right now we are going through the biggest fundamental shift in decades (in the long run, maybe the biggest ever). Today USO raced higher around 2:40, I've seen some news that OPEC shipments are declining and assume that has at least something to do with what's going on as well as Gaddafi bombing the oil fields in rebel held territory as the rebels have started exporting oil, he's obviously seeking to deprive them of financing their push against him.
I wanted to include an email sent to a member yesterday that goes into more depth on the oil situation and why I remain bullish on oil for the foreseeable future. As Obama hinted yesterday, "Get used to it" there's nothing that the government can do that will change things quickly. That's not entirely true, but I wouldn't presume to make judgements as to the wisdom of opening up the strategic oil reserve's in a revolutionary MENA environment.
Any way, as to OPEC shipments being down, this email may be somewhat helpful; here it is....
Longer term I still feel bullish on oil. I think the MENA situation and possible escalations in supply disruption are likely and I think with the Japanese crisis the world is re-evaluating clean, renewable energy and I think OPEC is aware that their days are probably numbered. Japan itself will lead the charge in clean, renewables. They're very sensitive to nuclear events, more like terrified because of their history and they are basically at the mercy of oil. Japan imports 100% of their oil, this is why they are especially sensitive to events in MENA as there are numerous geographic choke points that could interrupt their consumption needs and volatility in MENA raises the possibility of the Suez or other strategic, geographic choke points being cut off. So once Japan sets their mind to something, they technologically are the best suited to lead the effort. I don't think new nuclear plants are in their future and they know that they are at the total mercy of oil exporting countries. They'll try to become self reliant and then Europe will follow and finally the US with a lot of kicking and screaming, so for OPEC which contrary to popular belief, is actually in financial dire straits, is likely to make the most of the crisis as their hey day has more or less reached its apex. It will be down hill for them soon and while oil will continue to be in demand, they can't afford to lose the current demand they have now. So for the next few years, I believe they will find ways to keep oil elevated and climbing until they can figure out how to transform their economies. Of course the continued deteriorating situation in MENA will also keep oil high for the next few years. The mess there hasn't even started yet. As recent history in Afghanistan and Iraq show, even with 10's or a hundred thousand troops to support governments, they still can't set up a government that can stand on their own feet and that's with a huge US military presence, we can't do that in Yemen, Bahrain, Egypt, Tunisia, Libya, possibly Kuwait, Syria and who knows where else-the Ivory Coast? The potential for a push toward a regional Caliphate is virtually being handed to Muslim extremists. We're doing the heavy lifting for them, they just have to be politically prepared which they've been doing in Egypt weeks before Mubarak stepped down. In a power vacuum, the best organized wins. Look at the Islamic Revolution in Iran. What people wanted in protesting against the Shaw, is very different then what they ended up with.
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