Courtesy of the Associated Press by way of the Cape Cod Times,

Oil prices rose above $135 a barrel for the first time Thursday, with supply worries, global demand and an ever weakening U.S dollar driving crude futures up.

and not just in the Colonies:

Meanwhile, July Brent crude on the ICE Futures exchange in London also reached a new record of $135.13 a barrel Thursday. By midday in Europe, it had retreated to $134.35, a gain of $1.65 on its Wednesday close.

yipes, “retreated to $134.35″ - however as the button says “Don’t Panic”

With gas and oil prices setting new records nearly every day, analysts have begun to wonder what might stop prices from rising. There are technical signals in the futures market, including price differences between near-term and longer-term contracts, that crude may soon fall. But with demand for oil growing in the developing world, and little end in sight to supply problems in producing countries such as Nigeria, few analysts are willing to call an end to crude’s rally.

The inherent question is “How Soon is Now”

Over at Gary Savage’s blog he gives his pointers on when to short Black Gold:

That being said no one in their right mind should be shorting this thing yet. A good rule of thumb is to be on the look out for a correction that exceeds the previous corrections by 20% before trying to call the top. That would work out to be roughly $13.50. Once oil corrects by at least that amount then we might be looking at the end of this move. Until that happens your odds of trying to pick the top of this move are not good.

and a further warning from the Financial Times:

In a note, James Crandell and Adam Robinson of Lehman Brothers wrote that the upward slope of the futures curve suggested that the markets were being swayed by the prospect of “peak oil” – the start of an irreversible decline in oil supply.

They wrote: “The fundamental arguments being put forward for rising prices today are that demand, particularly in the non-OECD, will continue to grow robustly at the same time that oil production is “peaking.”

However, they added, they rejected the argument that oil had entered a new era after 130 years of boom and bust cycles, and suggested that prices would fall, “perhaps violently”, by the first quarter of next year.

Associated Fallout

“The airline industry as it is constituted today was not built to withstand oil prices at $125 a barrel, and certainly not when record fuel expenses are coupled with a weak US economy,” he said. “Our company and industry simply cannot afford to sit by hoping for industry and market conditions to improve.”

The Takeaway

[[IYT]] looks good from an RSI(2) viewpoint (hat tip to Wood) and [[DUG]] has already started to make it’s run.

Disclaimer

Don’t make investment choices based soley on the ramblings of the last place performer in an internet election on this site. While the “underground” is cool for hip-hop, it might not be so good for your investment portfolio. Do your Own Freakin’ Homework.