With investment capital continuing to flow into commodities and in particular into oil the energy complex remains firm and primarily focused on the weakening US dollar. Fundamentals and all of the other normal market drivers remain in the background.
Although the market is expecting another build in crude oil (8th week in a row) and the 11th week of builds for gasoline the market is not likely to overreact to this bearish news when the EIA releases its next oil inventory report tomorrow morning. In fact gasoline is significantly over supplied with inventories through last week at the highest level since 1993. With the majority of the heating season behind us all eyes will quickly be looking toward the upcoming gasoline driving season. With the amount of gasoline still in inventory (and growing) it shows how over-valued gasoline prices are as well as the rest of the complex.
As we have been indicating the market remains very susceptible to a downside correction. With OPEC likely to roll over their existing agreement at the meeting tomorrow and with the EIA expected to release another bearish inventory report one would think tomorrow could be the beginning of the correction. However, with market participants focus on the financials and currencies the likelihood of the correction beginning anytime soon is still relatively remote.
Currently prices are firm even as the dollar has bounced off of its overnight lows.
| Current Expected Trading Range | | | ||
| | 3/4/08 | Change | Upper | Lower |
| | | From | Resistance | Support |
| | 7:53 AM | Yesterday | | |
| Apr WTI | $103.09 | $0.64 | $103.25 | $99.20 |
| Apr HO | $2.8481 | $0.0073 | $2.9200 | $2.7100 |
| Apr RBOB | $2.6836 | $0.0116 | $2.7000 | $2.5200 |
| Apr NG | $9.405 | $0.059 | $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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