After a long holiday weekend once again it is all about the economy. The rout in the financial markets gained steam on Monday (a US holiday) as exchanges around the world were hit with a round of heavy selling. Even with many traders gone for the long holiday weekend the Nymex electronic exchange was also hit with heavy selling as concerns mounted over weakening oil demand if the world’s economies head into a recessionary pattern.
We have been predicting since the beginning of the year that the market was overdone and ripe for a downside correction. Those forecast have all come true. We also believe that prices still have further downside before we see an end to the correction. We believe the market will work its way down to the lower support levels listed in the table at the end of this report. For the first time in a long time the market is primarily focused on supply/demand and the world’s economies as very little is happening on the Geopolitical front.
The speculators will continue to build cautious short positions over the next week or so and long hedgers should still be holding back as we do not believe the lows of this move have yet been set. We expect this week’s pattern to be similar to the trading pattern we have seen over the last several weeks. We are raising a caution flag as the market can reverse itself very quickly on any major bullish news entering market as the market has become a bit oversold at this point. Absent anything new the perception as to the next move of the US economy will continue to be the main market catalyst at least until the inventories are released.
This week the EIA will release both oil & NG inventories on Thursday, Jan 24 with the oil report delayed one day due to the holiday and NG released normal.
Finally congratulation to the New England Patriots & NY Giants but being a lifelong Giants fan all I can say is Go GIANTS.
Currently prices are on the defensive in very early overnight trading. My report is being released at this time due to my traveling on the redeye back to NY.
| Current Expected Trading Range | | | ||
| | 1/21/08 | Change | Upper | Lower |
| | | From | Resistance | Support |
| | 9:50 PM | Yesterday | | |
| Feb WTI | $88.52 | ($2.05) | $92.50 | $86.00 |
| Feb HO | $2.4600 | ($0.0474) | $2.7500 | $2.4400 |
| Feb RBOB | $2.2559 | ($0.0475) | $2.6500 | $2.1800 |
| Feb NG | $7.825 | ($0.168) | $8.000 | $7.600 |
| | | | | |
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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