As if this were news, crude oil has been in a confirmed correction since May 28th, which is now trading below $123/barrel, more than $12 from its recent high of $135/barrel just two weeks ago. Note the heavy volume-based selling on the Klinger Volume indicator. This may be due to clogged unloading terminals world-wide as tanker ships (being used to store crude oil) rush to port to try to unload their costly cargo. This phenomenon was predicted two weeks ago in John Mauldin's newsletter that I mentioned (and provided a link to) on this blog.Iranian Government Storing Oil in Tankers?
The Iranian government had parked crude oil off its coasts in tanker ships, renting most of the world's available tanker capacity, in anticipation of yet higher crude oil prices. Very astute! (Strange, however, that they were simultaneously trying to blame speculative oil traders for higher prices while speculating on higher prices themselves at the same time with this stunt. I think the word for this is hypocrisy.) When prices collapsed due to free market forces, while they were paying about $100,000 per month, per tanker, to store crude oil, Mauldin predicted that they would all rush to port immediately to try to dump their cargo at the best available price, potentially causing a (temporary) glut of crude oil and a resulting collapse in prices. This chart confirms a correction in the price of crude oil. I consider this a correction, not a downtrend. In other words, it is likely to be only temporary. I have no idea how low it will last, but I expect it to be temporary. May it last a long time!
