Diary of a Financier

Oil, Black Gold, Texas Tea

In Capital Markets on Mon 7 Mar 2011 at 10:12
  • Oil trading above 61.8% Fibonacci retracement.
  • Next stop is a pause at $110, with 2nd resistanec at $120.
  • Buying USO June 55 Calls @ 0.90.

Crude sweet oil for April delivery broke above its final Fibonacci resistance this morning, en route to retracing its path back to 2008’s all time high at $150:

CL/1- above Fibonacci resistance, heading to $110, where it will pause before testing $120.

Big question is, how do I play this?  I’m not keen on commodity ETFs like USO, but as momentum is driving Oil through the roof, I’m not so concerned about contango eroding the upside.  USO is abutting resistance, about to break through at the open today.  It’s hard to find the next resistance, but $60 looks fitting:

USO daily- about to break 1st resistance at $42.50, run all the way to $60.

I’m going to buy the USO June 55 Calls, last traded around $0.93 so far this morning:

Now, in conclusion, I can’t help myself:

Come and listen to a story about a man named Jed
A poor mountaineer, barely kept his family fed,
Then one day he was shootin at some food,
And up through the ground came a bubblin crude.

Oil that is, black gold, Texas tea.

–Romeo

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