The market remains firm and highly volatile as exhibited by the intraday erratic movements from positive territory to negative territory only to finish on the firm side. This has been the pattern of late as the spec funds continue to follow the weakening dollar and flow additional funds in the energy complex. The trade of late is buying oil as a hedge against inflation resulting from a weakening US Dollar.
We do not expect this pattern to change in the very near future but we also continue to view the energy complex as extremely overbought (especially for crude oil) and very susceptible to a correction. The current price level is significantly ahead of any fundamental support.
Our warnings and recommendations remain the same… trade from the long side with caution employing tight, trailing stops and hedge using options strategies. Both recommendations are based on expectations of a correction before too long.
Currently prices are mixed in early trading.
| Current Expected Trading Range | | | ||
| | 3/7/08 | Change | Upper | Lower |
| | | From | Resistance | Support |
| | 6:55 AM | Yesterday | | |
| Apr WTI | $105.14 | ($0.33) | $110.00 | $99.20 |
| Apr HO | $2.9571 | ($0.0162) | $3.0000 | $2.7100 |
| Apr RBOB | $2.6566 | $0.0034 | $2.7000 | $2.5200 |
| Apr NG | $9.820 | $0.078 | $9.800 | $8.700 |
| | | | | |
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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