Wil Oil Ever Retreat?

OIL ANALYSIS
Just when oil price showed some signs of retreat, US crude oil inventory dropped more than expected, spurring oil price up once again, challenging the $120 per barrel mark. What would cause oil price to drop? When the US dollar starts appreciating and if demand for oil drops significantly like it did back in the original oil shock of the 70s. We don't have either right now. How about supply side? How about an OPEC production boost? Certainly that would help bring down oil price as well? 2 things here; 1. If you are OPEC ministers making huge bucks while drilling the same amount daily, would you boost production, incur higher capital cost just to make fewer bucks per barrel? Certainly not. 2. OPEC has already decided not to talk about production changes until their next meeting in September! So, we can put that on the shelf for now. Well, like I always said, the only people Henry Ford and the Wright Brothers made really rich are the oil producing people.

TECHNICAL ANALYSIS
The Dow spent another day sideways today, making a slight higher high and higher low. This makes it a slightly bullish sideways day. All these sideways movement are occurring with the Dow retreating from overbought position, which makes it a good thing as a retreat back into the oversold region would certainly help the Dow break out of its current lobotomy and challenge the 13000 resistance level. Immediate short term support for the Dow is at the 12500 level, so a retreat back down to that level before rebounding for the 13000 does seem reasonable as well, so there is nothing to panic about.