The market has been trading in a range with both gains and declines in the same trading sessions for the last several days. The market continues to mull the many possibilities for supply disruptions including Iran, Nigeria and now the 5 day strike by Brazilian Oil Workers which has already resulted in a small production cutback. Added to the mix is the weakening US dollar. The dollar has been under strong pressure for the last several weeks and is now close to its lowest level versus the Euro since April of this year. With all of the turmoil currently in the US financial markets it is now unlikely that the Fed is going to raise interest rates anytime soon. As such a bearish action for the dollar and thus a bullish event for oil.
Supply and demand remain tightly balanced even as OECD countries like the US experience a modest reduction in consumption. On the other hand in the developing world consumption continues to increase. In fact there are indications that China plans to continue to subsidize imports of refined products and crude shipments to the two major refiners in China through the 3rd quarter. This action will further support demand growth. Until new spare capacity opens up (IEA projects an improved situation by 2009) the market will remain in a long term uptrend with downside corrections short and shallow.
Tomorrow we get another snapshot of US fundamentals when the EIA releases it latest report. The early indications are projecting another modest decline in crude oil, a small decline in gasoline and an above average seasonal build in distillate. Demand is projected to remain on the defensive. The market will be primarily focused on the growing year on year deficit of crude oil which is now well over the 50 million barrel mark and if US demand continues to decline. With the market sentiment decidedly bullish we think the report will be viewed as mostly bullish if the actuals come in as expected as all eyes look at the crude oil situation.
We expect the rest of the week to trade in a wide range with an upside bias as long as all of the Geopolitical possibilities remain in the media. The next projected threshold is once again not too far away from being breached. This could happen as early as this week if the inventory report is more bullish than expected, Iran & Nigeria stay in the news and the dollar continues to fade into the sunset.
Currently prices are firm across the complex with a weak dollar versus most major currency pairs.
| Current Expected Trading Range | | | ||
| | 7/15/08 | Change | Upper | Lower |
| | | From | Resistance | Support |
| | 7:08 AM | Yesterday | | |
| Aug WTI | $145.81 | $0.63 | $150.00 | $130.00 |
| Aug HO | $4.0910 | $0.0261 | $4.0000 | $2.7100 |
| Aug RBOB | $3.5817 | $0.0240 | $3.7500 | $3.0000 |
| Aug NG | $12.030 | $0.071 | $13.500 | $11.000 |
| | | | | |
| Euro/$ | 1.5944 | 0.0081 | 1.6000 | 1.5200 |
| Yen/$ | 0.9574 | 0.0117 | 1.0450 | 0.9000 |
The Energy Management Institute operates a fleet of daily, weekly and biweekly energy publications covering various angles of the energy market, including over a decade of natural gas and power price indexing. In addition, EMI provides higher learning for energy professionals with comprehensive, fully accredited, energy education programs from basic to advanced level. It also provides critical business information services and thought leadership in the energy segments of Oil, Gas, Power, Alternative Fuels, soft commodities and metals.
For more info visit our website (www.energyinstitution.org), email EMI at info@energyinstituion.org or call 888-871-1207
Dominick A. Chirichella
Energy Management Institute
tel 646-202-1433
fax 801.383.7510
This message and any attachments relate to the official business of the Energy Management Institute ("EMI") and are proprietary to EMI. This e-mail transmission may contain information that is proprietary, privileged and/or confidential and is intended exclusively for the person(s) to whom it is addressed. Any use, copying, retention or disclosure by any person other than the intended recipient or the intended recipient's designees is strictly prohibited. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution or the taking of any action in reliance on this information is strictly prohibited. If this message has come to you in error, please immediately notify the sender by telephone or return e-mail and delete the original transmission and its attachments without reading or saving in any manner. Thank you.
No comments:
Post a Comment