Dominick Chirichella's OilView: Latest As Of Tuesday Morning

The erratic trading pattern continues in the oil complex as well as many other markets around the world. Oil is recovering after yesterday’s steep declines as many market participants now await the results of the Federal Reserve meeting today. All expect the Fed to lower interest rates aggressively today which could cause another round of selling in the US dollar and thus helping to keep commodity, and in particular, oil prices firm.

Although the market seemed to be very concerned over the faltering US economy during Monday’s trading that concern seems to have been put to the back burner for the moment. Thus the extreme volatility we have been experiencing in the complex results from major shifts in sentiment almost on an hourly basis. Yesterday we saw huge intraday swings with gasoline ultimately getting pummeled falling over $0.18/gal on the day. This is indicative of a market where the bulls are becoming weaker with a much lower tolerance for hanging around during reversals.

We expect this pattern to continue for the near future and based on prices moving back into positive territory today it still does not seem that a strong (overdue) downside correction is not in the card right now. Yesterday’s decline did very little to rectify the over-valued nature of the energy complex. Divergences still exist with the Nymex April & May goalie crack spreads now trading in negative territory. This is not very representative of a strong bull market.

Tomorrow oil stocks will be released with the market looking for another build in crude oil, a small decline in gasoline and a seasonal decline in distillate. For the time being we do not expect the market to be overly influenced by the release of the inventory reports as all eyes remain focused on the Fed and subsequent reaction in the currency and equity markets.

Currently prices are firm.

Current Expected Trading Range
	3/18/08	Change	Upper	Lower
		From	Resistance	Support
	8:36 AM	Yesterday
Apr WTI	$108.22	$2.54	$112.50	$99.20
Apr HO	$3.1250	$0.0566	$3.2500	$2.7100
Apr RBOB	$2.5675	$0.0633	$2.9000	$2.5200
Apr NG	$9.350	$0.250	$10.250	$8.700