The week is starting with the financial markets in turmoil after JP Morgan had to buy Bear Stearns (backed by the Fed) over the weekend for a bargain basement price of $259 million dollars. In addition in a very unusual weekend move the FED lowered the discount rate, its lending rate to financial institutions by 25 basis points and they also created a lending facility for big investment banks to secure short-term loans. Finally the FED is expected to lower interest rates possibly by as much as 1% when they once again on Tuesday.
All of this unusual weekend activity is creating turmoil in financial markets around the globe with equities lower all over and the UD dollar plunging against many major currencies. Needless to say oil is holding firm as a result of the weak dollar. As strange as it seems oil has become a safe haven along with Gold as investors move funds out of the financial markets. How long this relationship lasts is another questions. For now (and for the last month or so) it has been a solid relationship.
As we said in Friday’s report we expect the volatile and firm oil trading pattern to continue until some stability emerges in the financial world. By all normal standards the entire oil complex is extremely overvalued and very susceptible to major downside correction. Be cautious in all activities involving the energy complex, especially from the non-physical trading instruments, like the Nymex instruments.
Currently prices are firm after already making new highs overnight.
| Current Expected Trading Range | | | ||
| | 3/17/08 | Change | Upper | Lower |
| | | From | Resistance | Support |
| | 7:31 AM | Yesterday | | |
| Apr WTI | $110.48 | $0.27 | $112.50 | $99.20 |
| Apr HO | $3.1555 | $0.0090 | $3.2500 | $2.7100 |
| Apr RBOB | $2.7047 | $0.0153 | $2.9000 | $2.5200 |
| Apr NG | $10.011 | $0.143 | $10.250 | $8.700 |
| | | | | |
Dominick A. Chirichella
Energy Management Institute
tel 646-202-1433
tel 845.368.3904
fax 801.383.7510
www.advancedenergycommerce.com
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