As we end another interesting week prices remain firm but below the all time highs made this week. The US dollar is currently on the negative side so once again all sings are pointing to prices remaining firm. This week’s fundamentals really got the market bulls out in force after a surprisingly huge decline in crude oil and gasoline. However, when digging deeper into the numbers we still find that inventories are still very comfortable and the possibility for a supply disruption is rather low. IN fact the IEA also released their Summer gasoline outlook this week which indicated they expect a reduction of almost 40,000 bpd in gasoline demand this year versus last year.
So where do we go from here? For the moment the market sentiment remains solidly biased to the bullish side and the prospects for a major downside correction does not look like it is going to happen anytime soon. We do expect prices to continue to trade in the pattern of the last few weeks. If inventories continue to surprise and build we can expect additional surges to the upside. On the opposite side of the fence we have seen refinery runs increase this past week and talk in the media that Valero is increasing runs as refinery economics begin to improves. If that is the case we may not see the larger than expected declines of the last few weeks in gasoline and may start to see distillate beginning to build or at least arrest the decline of late.
Currently prices are quietly firm for energy and weak for the US dollar.
| | 4/11/08 | Change | Upper | Lower |
| | | From | Resistance | Support |
| | 6:51 AM | Yesterday | | |
| May WTI | $110.39 | $0.28 | $112.50 | $99.20 |
| May HO | $3.2275 | $0.0335 | $3.2500 | $2.7100 |
| May RBOB | $2.7950 | $0.0029 | $2.9000 | $2.5200 |
| May NG | $10.002 | ($0.096) | $10.250 | $8.700 |
| | | | | |
| Euro/$ | 1.5779 | 0.0082 | 1.5818 | 1.5200 |
| Yen/$ | 0.9903 | 0.0054 | 1.0450 | 0.9900 |
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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