The see-saw ride continues. The market was unable to maintain the selling that began on Tuesday and spread into early Wednesday trading. The buy the dip mentality pushed prices back into positive territory by mid day and never looked back. Once again the market is looking at the projections of this week’s inventories (due out today) and the potential for a indication that demand is declining resulting in some light selling so far today.
As we discussed in yesterday’s report the market is showing some early signs of possibly beginning a major correction but it is a bit too early to say that with a lot of certainty. Although we are still trading off of last week’s historical high the market also has the characteristics of yet another short and shallow correction. There is not much new floating around the media to support another surge (principally the evolving situation in Nigeria) but a bit more news that seems supportive to another strong round of selling…concern that elasticity of demand is setting in and ongoing bottoming and slight firming of the US dollar.
Today’s inventory report is expected to show a small decline in crude oil and gasoline and a modest build in distillate. Refinery runs are expected to also increase as refinery economics have been improving over the last month or so and are now at very comfortable levels. That part of the report is projected to be neutral at best. However, the market will be primarily focused on the demand numbers which most participants are expecting to see continued erosion in US demand figures, especially for transportation fuels like gasoline. If the numbers do show a weak demand picture we would expect strong spec & investment buying flowing into the market after the numbers are released.
Although we have not seen new historical highs this week it is still early and very dependent on the outcome of today’s EIA fundamental report at 10:30 am EST. So far this morning prices are weaker for energy and form for the dollar.
| Current Expected Trading Range | | | ||
| | 5/29/08 | Change | Upper | Lower |
| | | From | Resistance | Support |
| | 6:15 AM | Yesterday | | |
| Jul WTI | $130.13 | ($0.90) | $135.00 | $99.20 |
| June HO | $3.8065 | ($0.0178) | $4.0000 | $2.7100 |
| June RBOB | $3.4429 | ($0.0047) | $3.5000 | $2.5200 |
| July NG | $12.022 | $0.027 | $12.000 | $8.700 |
| | | | | |
| Euro/$ | 1.555 | (0.0070) | 1.6000 | 1.5200 |
| Yen/$ | 0.9523 | (0.0040) | 1.0450 | 0.9000 |
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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