Posted By:Lee
Brodie
Topics:Economy
(U.S.) | Stock Market| Stock Picks
Sectors:Oil
and Gas
Oil prices
[EMAIL PROTECTED]
138.54 10.75 (+8.41%)]shot
up nearly $11 to a new record Friday after Morgan Stanley predicted prices
would hit $150 by the Fourth of July. The unprecedented jump is all but certain
to drive gas prices well past the $4 mark in the coming weeks.
Oil's meteoric surge, which pushed
prices more than 8 percent higher in a single day, added to a huge increase
Thursday to cap oil's biggest two-day gain in the history of the New York
Mercantile Exchange. The burst higher -- which also came on rising Middle East
tensions -- also raised the prospect of accelerating inflation by adding to
already strained transportation costs.
What does this mean for the stock market? For further insights we turn to
strategic investor Dennis Gartman. Following is a synopsis of his main points.
What happened on Friday?
The oil trade has come unhinged,
Gartman says. I am completely afraid to trade crude oil. I’ve doubled up on my
nat gas stocks as a kind of hedge.
What’s gone wrong?
I think the floor itself has become
de-populated, Gartman replies. Large traders who in the past might have taken
the short side of the trade to create liquidity are simply not there. Everyone
has pulled their horns in. There’s an illiquid market and Friday the news out
of Israel and Iran as well as the Morgan Stanley $150 estimate created the
perfect storm.
Does this increase the chance of
government intervention?
You
bet, he says. I have to think more government officials are looking at the $11
jump in crude and saying we have to do something.
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