As we have been predicting the market remains in a corrective pattern since hitting all time highs at slight above $100/bbl. The high was hit on Jan 3rd. Wednesday’s inventory report supported the premise the premise that the market is overvalued and further downside movement is likely. Although there was another larger than expected decline in crude oil the rest of the complex put in bearish numbers. Gasoline increased a little over 5 million barrels and is now at last year’s level. Distillate succumbed to the warm weather we have been experiencing increasing by 500,000 bbls at a time when we should be experiencing declines. Finally refinery runs increased strongly and are now well over the 90% level.
Overall the fundamentals are being interpreted as biased to the bearish side while all of the other drivers are also neutral at best. The normal Geopolitical hotspots have been quiet, the US economic information is still mixed as the equities market remain in a downside move since the beginning of the year while the USD dollar remains in a sideways pattern. We expect the market will remain in the current pattern and likely hit lower levels prior to making its next attempt to the triple digit level. As we have been discussing in previous reports although the market has declined it still remains solidly in the long term uptrend and is not in any jeopardy of breaching any of the long term support levels.
Currently prices are quietly weaker in very early trading.
| Current Expected Trading Range | | | ||
| | 1/10/08 | Change | Upper | Lower |
| | | From | Resistance | Support |
| | 1:39 AM | Yesterday | | |
| Feb WTI | $95.55 | ($0.12) | $100.00 | $90.00 |
| Feb HO | $2.6134 | $0.0000 | $2.7500 | $2.5000 |
| Feb RBOB | $2.4315 | ($0.0040) | $2.6500 | $2.2000 |
| Feb NG | $8.170 | $0.071 | $8.000 | $7.000 |
| | | | | |
Dominick A. Chirichella
Energy Management Institute
tel 646.202.1433
fax 801.383.7510
www.energyinstitution.org
www.advancedenergycommerce.com
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