Dominick Chirichella's OilView: Latest As Of Wednesday

The roller coaster ride continues in the energy complex as the oil markets are once again on the defensive. After a strong downside correction on Monday prices recovered on Tuesday only to be back on the downside this morning. For most of the week the market has been driven by the ups and downs of the US economy and to a lesser extent by the currency markets. Now many overnight participants are looking toward today’s oil inventory report for some possible guidance as to the next move.

The market is expecting another 2 million barrels build in crude oil, a gain of about 300,000 barrels of gasoline and decline of about 1.5 million barrels of distillate. By all normal analysis this type of an oil inventory report would be interpreted as bearish especially since both crude oil and gasoline have been in a building pattern for several months leaving gasoline at the highest level since the early 19990’s. However, the pattern over the last month or so has seen bearish oil inventory reports met by selling once the report is released only to recover before the end of the day. We will have to wait to see how much the market discounts this possibly bearish news before drawing any major conclusions on this week’s impact on energy prices.

As we discussed on Monday everything happening in the market over the last week or so does not help much in assessing the medium term direction for the market. We remain in a pattern that continues to only reveal itself from a very short-term perspective. We are in a highly volatile, choppy pattern that is very difficult to trade as well as make hedging decisions. If yesterday’s strong interest rate adjustment by the FED ultimately helps to stabilize the equities markets we may then hope to see a bit more stability in the energy complex. The complex still remains significantly over-valued and very overdue, and susceptible to a deep downside correction.

Currently prices are strongly lower.

Current Expected Trading Range
	3/19/08	Change	Upper	Lower
		From	Resistance	Support
	8:52 AM	Yesterday
Apr WTI	$106.97	($2.45)	$112.50	$99.20
Apr HO	$3.0546	($0.0833)	$3.2500	$2.7100
Apr RBOB	$2.5853	($0.0747)	$2.9000	$2.5200
Apr NG	$9.299	($0.115)	$10.250	$8.700