A quiet weekend and a quiet start to trading so far today. The market put in a strong gain last week on a surprise inventory report, weaker dollar and a variety of infrastructure mishaps including a leaky pipeline that is currently under repairs. The specs are once again in command and are likely to hold the majority of their long positions until it is clearer as to the direction of the US dollar.
Prices are hovering near the all time highs and we do not expect much of a retracement until after this week’s inventory report. As we have said many times the market remains significantly overvalued with little fundamental or economic support for the current price level. Both eh EIA & IEA released their monthly oil reports and both agencies indicated they were decreasing demand growth due to a weakening world economy in particular the US economy. In fact the EIA is projecting a decline in gasoline demand this year for the first time in 17 years.
Trading and hedging remain challenging. From a trading perspective we continue to recommend using tight trailing stops while from a hedging perspective we continue to recommend options spread strategies for hedging from the buy side. Currently prices are drifting lower as the US dollar firms slightly versus the Euro.
| Current Expected Trading Range | | | ||
| | 4/14/08 | Change | Upper | Lower |
| | | From | Resistance | Support |
| | 7:03 AM | Yesterday | | |
| May WTI | $110.11 | ($0.03) | $112.50 | $99.20 |
| May HO | $3.1850 | ($0.0125) | $3.2500 | $2.7100 |
| May RBOB | $2.7851 | ($0.0222) | $2.9000 | $2.5200 |
| May NG | $9.930 | $0.029 | $10.250 | $8.700 |
| | | | | |
| Euro/$ | 1.5781 | (0.0005) | 1.5818 | 1.5200 |
| Yen/$ | 0.9959 | 0.0008 | 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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