Michael Fitzpatrick Market Quotations

If the stock market were not making five- and six-year highs, Iran and the U.S. were fast friends and the Nigerian militants were stuffing flowers in the gun muzzles of the Nigerian army -- then we might be worried about a reversal, but not now.

The real dichotomy in this market is that crude inventories are very high and that could make for some violent, back-and-forth price action. For the foreseeable future, the path of least resistance remains up until there is a significant structural economic or political shift.

Crude inventories are at extraordinarily high levels, due in part to a steady flow of imports in recent months, giving the market a thick buffer against potential supply disruptions.

Even in a bull market you get periods of a little relief, and this is one of them. Some of the Iranian words today were conciliatory. In reality nothing has changed and the market will soon rise again.

The weekly inventory numbers caught the market by surprise again. The unanimous UN decision demanding Iran stop nuclear enrichment probably rekindled concern that Iran will use oil as a political weapon.

Despite a weekend blizzard in the Northeast and an oversold market after a 16% sliding the last six sessions, record high levels of gas in storage would temper any buying even if the weather stays cold.

Apparently, the market thinks that OPEC is set to simply roll over the existing production quota in the upcoming meeting. Even so, there will probably be provocative comments from both Iran and Venezuela.

The market got ahead of itself earlier this week. With the world in its present state a move into hard assets makes complete sense. Any decline in oil should be looked at as a buying opportunity.

The market is at a do-or-die moment. There now has to be a decisive move to take out the recent highs or the market will take its cue from the fundamentals, which are bearish.