HedgeFundLive.com — As the week started off, many traders took the Goldman Sachs report on oil to heart. After a reevaluation, GS has reported that crude should return back to the sub $100 level. Selling of the long contracts began immediately on Sunday night as the Asian markets opened, leading to a steep retreat as oil sank from $113 per barrel to $108 for the day. The Monday open showed some strength, but the gains were lost in the afternoon. From the technical angle, this is a natural pull back and the technical traders would remain bullish, noting the bounce off of the 20 day MA, and a positive turnaround in the stochastics.
Interestingly enough, many institutional investors and hedge funds have jumped into oil in the past few weeks. This has led to a prop up in the premium for oil. If oil volatility continues, this premium will come down as quickly as it has run up. News from Libya and the Middle East now has less emphasis, as NATO headlines become third page highlights on the WSJ. As for the rest of the energy sector, uranium and natural gas still look like attractive at these levels.
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