This is usually the time of year when North American demand for crude drops, but the economic recovery of the rest of the world will help stabilize crude prices over the winter. Mid winter will be the time to look at the seasonal lows for oil prices but I would be surprised to see much of a drop through the winter. From now until the spring refineries usually slow or shut down operations for maintenance. We should start to see a build in U.S. crude stocks, but demand from the rest of the world will help negate any North American build. It is still early to predict but I would be surprised if oil moved any lower than say $60 through the low of winter demand. I still like oil for $100/bbl through the summer of 2010. Beyond $100 (seasonal highs) from 2010 – 2012 as economic recovery continues.

Markets are continuing to recover and as I stated months ago Eastern economies continue to lead the way. The sideways North American market action I thought we would see through the summer should now start to give way to a return of an upward trend. Earnings reports with most of the bad news built into share prices should reflect more positively as the march to year-end continues. Some manufacturers are starting to reflect this.

If you live in Canada the bad news is that our ever-strong Canadian dollar (up against 16 world currencies?) is going to hinder exports thus limiting job growth in Canada as most of our exports are to the United States. Obama and company won’t tell you but a weaker U.S. greenback is a stimulator in the U.S. for growth there, and they probably welcome it. Eventually though as the United States recovers somewhat of a (small) return to the buck support will occur so don’t expect the greenback to become valueless yet.

Which segues me to one of my other favourite commodities, gold. I see gold maintaining the $1000/oz through the winter until at least the spring of 2010 and should peak into the $1100 range. Volatility (price swings) will continue as the price range increases. I continue to be extremely bullish on oil and gold long term.

LME base metal inventories on a basic level continue to rise but world supply on a daily basis remains relatively thin (if world production suddenly stopped). True demand will eventually pick up again which is just a matter of time when the thirst for durable goods return which will only really begin when consumer economies have full job recovery and confidence to really spend again. This will continue to be a slow process. This is just my opinion and best guess.

rich47