The market is absolutely getting pounded in the midst of financial turmoil in the US markets. Fed Chairman Bernanke in testifying before Congress indicated that inflation remains the main worry of the Fed. This comment has halted the dollar selling for the moment bringing the dollar back to almost unchanged on the day after flirting with record lows versus the Euro. A stronger dollar will push prices for oil down as both the dollar and oil have been trading in mostly in sync. As shown in the table below each 1% firming of the dollar could translate to a little over a 7% decline in the price of WTI.
Further impacting oil at the moment is the accelerating weakness in the worldwide equities markets. There is a tremendous amount of bad news floating around over the state of the US economy especially in the financial sector. In addition GM also raised fears in the market today after announcing a suspension of their dividend payments and laying off 20% of their staff. Weak equities markets usually translate into a view that oil consumption will also decline.
The market is undergoing a significant correction. It is still too early to determine if it will follow the pattern of short and shallow. For the moment stay buckled up and be cautious in your trading and hedging executions.
Currently prices are lower across the board.
| Current Expected Trading Range | | | ||
| | 7/15/08 | Change | Upper | Lower |
| | | From | Resistance | Support |
| | 11:14 AM | Yesterday | | |
| Aug WTI | $138.67 | ($6.51) | $150.00 | $130.00 |
| Aug HO | $3.9119 | ($0.1530) | $4.0000 | $2.7100 |
| Aug RBOB | $3.3805 | ($0.1772) | $3.7500 | $3.0000 |
| Aug NG | $11.475 | ($0.484) | $13.500 | $11.000 |
| | | | | |
| Euro/$ | 1.59 | 0.0037 | 1.6000 | 1.5200 |
| Yen/$ | 0.9596 | 0.0139 | 1.0450 | 0.9000 |
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