Oil Top at Hand

An oil top might be very much at hand (or actually given that oil dropped from $103 to $98 while writing this post, oil might actually have already topped out).

I have covered this extensively since early Feb, and for that matter, here's the past few relevant posts.
Since my last post, a couple of interesting posts have been published by fellow bloggers.
[...] this morning the New York Times headline concerned the oil market [...]

The headline itself is emotionally very restrained. However, I do think that the two year rally from the December 2008 low at $35 has built up a substantial bullish investment crowd in the oil market. People keep telling me that oil can only go up from here because of inflation, and improving world economy, etc.
Once the psychological $100 barrier is breached I think sellers will come out in droves. Within a couple of years crude oil should be selling below $50.
Today on Babak's Trader's Narrative:
Analysts are tripping over themselves to reset their price targets higher: $150, $200, do I hear $300?

I know that there is rampant fear out there right now and the grisly images are difficult to ignore. Yet, we must remember that the market’s job is to provide the maximum pain for the maximum amount of participants. That is to say, it is never as easy as one imagines: trouble in Middle East, ipso facto, buy oil.

My contention is that we are much closer to a top here than a buy opportunity.
Babak's has some nice charts showing how the rally has been overextended in oil.

[Update] I just ran into this amazing advert offering you a 200:1 leverage to speculate on oil...

Full disclosure: I've opened a small put options position on oil today. Fingers crossed, and Caveat Emptor

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