We are starting the week in the same direction as it was ended…lower. The market is back to looking for direction for its next move. For the moment most of the Geopolitical hotspots have gone quiet, oil product inventories were bearish this week, warmer than normal weather is engulfing most of the US and last week’s economic indicators were not supportive for the US economy and thus oil demand growth. All of this on the backdrop of the market hitting triple digits for WTI twice last week.
We believe the market is overdone and ahead of itself for the time being. We also believe that the market is more likely to experience a downside correction before it solidly trades above the $100/bbl level and stay there for an extended period of time. The main catalyst will be the direction of the equities market, US dollar and the coming round of US inventories. Also this week both the EIA and the IEA will release their monthly make assessments. The market will be looking at the demand projections in both of these reports very closely.
The market will be back to normal as far as liquidity is concerned and thus the moves we get this coming week should have more validity than the light volume moves seen over the low liquidity holiday period over the last two weeks.
Currently prices are lower in early overnight trading.
| Current Expected Trading Range | | | ||
| | 1/7/08 | Change | Upper | Lower |
| | | From | Resistance | Support |
| | 1:43 AM | Yesterday | | |
| Feb WTI | $97.41 | ($0.50) | $100.00 | $90.00 |
| Feb HO | $2.6760 | ($0.0075) | $2.7500 | $2.5000 |
| Feb RBOB | $2.5045 | ($0.0065) | $2.6500 | $2.2000 |
| Feb NG | $7.860 | $0.019 | $8.000 | $7.000 |
| | | | | |
Dominick A. Chirichella
Energy Management Institute
tel 646.202.1433
fax 801.383.7510
dchirichella@emimail.org
www.energyinstitution.org
www.advancedenergycommerce.com
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