If contrarians are right, mass psychology says oil is headed for a tumble back to $20 a barrel!
Kiran Lunez, Special Correspondent
October 28, 2004

Oil took a nose dive but that what is more important is that crude oil futures chart has formed a nasty bearish pattern that is seen before major correction or even bear markets as pointed out in the chart Moving Average Convergence and Divergence. People are coming in night time talk shows like that of Coast to Coast AM run by Art Bell and predicting end of Petroleum based civilization and we are all going to the cave age. When that kind of things happens, common people get really scared and mass hysteria dominates, market surprises all with a violent opposite move. It may also point to Kerry winning. If Kerry wins, he is going to sell oil from the strategic reserve and Oil market may be discounting the same.

Oil prices fell sharply from near record peaks on Wednesday after a larger-than-expected build in U.S. crude stocks spurred traders to take profits from a fierce rally. U.S. light crude futures settled down $2.71 a barrel, or 4.9 percent, to $52.46 a barrel, extending a slide from an all-time high of $55.67 on Monday. London Brent fell $2.11 to $49.45 after briefly touching a record peak at $51.94 a barrel. Prices slid after the U.S. government's Energy Information Administration said crude stocks rose 4 million barrels to 283.4 million barrels, narrowing a deficit against last year to 9 million barrels. Oil prices have surged more than 60 percent this year, driven by blistering demand growth that has pushed global production to its limit and fueled fears that refiners have not made enough heating oil to last the winter. While the EIA showed heating oil stocks down 600,000 barrels to 48.9 million, some 15 percent below last year, analysts said that in the absence of a cold snap heating oil stocks should now start to grow as refineries return from seasonal maintenance. "We’re still losing ground on distillates, but that should probably improve in the coming weeks with refinery runs going up," said Phil Flynn, analyst at Alaron trading in Chicago. U.S. refineries will need to operate at about 92 percent of their capacity, up from the current 89.2 percent, before there can be a significant rise in distillate fuel inventories, the EIA said in a separate report Wednesday. The U.S. Federal Reserve said in a report Wednesday that, while the U.S. economy kept growing in September and early October, high-energy costs had constrained some consumer and business spending.