Latest on Oil as of Monday Morning

Quiet start to the last full week of trading prior to the long holiday period next week. The market continues to search for the next sustainable driver. For the moment many participants are back to focusing on the potentially weakening economy in the US. With the latest economic data (late last week) indicating that inflation may be rearing its head the market is interpreting that as a sign that consumers will lose some of their purchasing power and the eventually begin to reduce their energy consumption.

As we have been predicting for several weeks the market remains in a wide trading range with high volatility. WTI crude oil has been trading in a range of $85 to $95/bbl and will likely do so for the rest of the year unless something significant grips the attention of the spec community. With cold weather throughout most of the US last week we expect to see a modest decline in distillate stocks this week with build of gasoline and crude oil. Another mixed report that should prove to keep the market in the aforementioned consolidation (or range bound) pattern.

Barring anything new with usual energy drivers (Iran, Iraq, US economy, etc.) prices could drift lower during the holiday period unless we see the buy and hold funds quietly buying (as they have done late in the year over the last few years) to position their fund books for what is expected to be another up year in 2008 for oil.

Currently prices are drifting lower as of 7:45 am EST.