The market remains firm but skittish. Although it sounds like a broken record the meteoric surge in prices is all about the weak US dollar and the flow of investment funds into the oil complex. The market is not (and has not been) paying any attention to the true fundamentals of the market. The fundamentals do not support a price level anywhere near the level we are at right now. The emotionally charged bullish market sentiment will keep prices at the current level and possibly higher until the oversold dollar shows some signs of stabilizing.
Yesterday both IEA and the EIA in their monthly reports are forecasting a downturn in the oil demand growth in the US in 2008. IN fact after adjusting for ethanol use the EIA is now predicting that US oil demand will actually decline in 2008 by about 90,000 barrels per day. Amazing that this is forecast and prices are at the highest level ever!
Today the EIA will release oil inventories. The expectations are calling for a build of about 2 million barrels of crude oil, the 11th build in a row for gasoline of about 200,000 barrels and a decline in distillate of about 1.7 million barrels. Not a very bullish forecast but one the market is likely to discount as it has for the last month or so.
Our conclusions and recommendations remains the same and our caution flag remains raised as the market is tremendously overvalued and overdue for a substantial downside correction. Currently prices are quietly mixed as the US dollar is once again on the defensive.
| Current Expected Trading Range | | | ||
| | 3/12/08 | Change | Upper | Lower |
| | | From | Resistance | Support |
| | 7:38 AM | Yesterday | | |
| Apr WTI | $108.92 | $0.17 | $110.00 | $99.20 |
| Apr HO | $2.9997 | $0.0040 | $3.0000 | $2.7100 |
| Apr RBOB | $2.7224 | ($0.0037) | $2.9000 | $2.5200 |
| Apr NG | $10.054 | $0.054 | $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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