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CRUDE OIL MARKET FUNDAMENTALS: The weaker dollar coupled with some encouraging economic data are helping support the crude oil market, but with OPEC indicating an “ideal” price range of $70-80 per barrel, the trade may be reluctant to push prices much beyond current levels. Yesterday’s comments from the OPEC secretary general that member countries have restarted $45 billion of projects that had been postponed due to the economic crisis is being taking by some as further indication that the cartel is willing to boost output to keep prices from getting high enough to crimp demand. This notion is being reiterated by other OPEC ministers and is the theme of the International Energy Forum that is convening in Mexico this week. The OPEC minister also commented that he expects worldwide demand to increase by 900,000 barrels per day this year, mostly due to growth in China and India. A couple of terrorist events also lent underlying support yesterday – 1) a suicide bombing in Moscow subway by what are believed to be Chechen rebels and 2) the arrest in Saudi Arabia of 113 al-Qaeda linked militants, which underscored possible threats to Saudi oil production. Adding to the bear’s case is a report that Nigerian exports are expected to surge to well over 2 million bpd in May, up from 1.82 million in April. The G-8 has issued a statement that seemed to try to say everything and nothing at the same time. It called for “appropriate and strong steps” in dealing with the Iranian nuclear issue, but it did not mention sanctions and did mention remaining open to dialogue with Iran. If crude prices turn down from here, the chart action will reinforce the series of lower highs that has formed since the market put in its recent top on March 12th and would indicate that the market will likely turn lower. This would seem to make the March 17th high in May crude at 83.36 and the March 12th high at 83.47 critical. Key support levels are at Friday’s low of 79.54 and last week’s low at 78.86. Falling thru that second level could send the market back to 76.87.
GASOLINE: May RBOB also reached its highest level since March 18th on decent consumer spending data and the weaker dollar yesterday. Overnight it traded up near yesterday’s highs. US retail gasoline prices fell last week for the first time in six weeks, but this came after they reached their highest level since October 2008 the previous week. Gasoline margins on the board are still strong but have slipped off of their recent highs. If crude stalls or moves lower, then RBOB might find it difficult to break out above the consolidation of the past several weeks. Gasoline stocks have declined the past few weeks but they are still running well ahead of last year and the 15-year average. Key resistance for May RBOB comes in at the March 17th high at $2.3135.
HEATING OIL: Above normal temps expected in the Northeast today through the next 10 days suggest heating demand will be minimal. May heating oil rallied right up to its Mar 17th high of $2.1560 yesterday and is close to breaking out above the upper end of its consolidation range, but it may be difficult to do so without a breakout in crude oil or further draws to heating oil stocks. Key resistance May heating oil comes in at March 17th high of $2.1560 with support at $2.1072 and $2.0607.
TODAY’S ENERGY MARKET GUIDANCE: OPEC’s target price range of $70-$80 per barrel has traders skeptical that the market can move much higher from here.
Energy Market Commentary – 2010.03.30
by Dave Hightower on March 30, 2010
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
CRUDE OIL MARKET FUNDAMENTALS: The weaker dollar coupled with some encouraging economic data are helping support the crude oil market, but with OPEC indicating an “ideal” price range of $70-80 per barrel, the trade may be reluctant to push prices much beyond current levels. Yesterday’s comments from the OPEC secretary general that member countries have restarted $45 billion of projects that had been postponed due to the economic crisis is being taking by some as further indication that the cartel is willing to boost output to keep prices from getting high enough to crimp demand. This notion is being reiterated by other OPEC ministers and is the theme of the International Energy Forum that is convening in Mexico this week. The OPEC minister also commented that he expects worldwide demand to increase by 900,000 barrels per day this year, mostly due to growth in China and India. A couple of terrorist events also lent underlying support yesterday – 1) a suicide bombing in Moscow subway by what are believed to be Chechen rebels and 2) the arrest in Saudi Arabia of 113 al-Qaeda linked militants, which underscored possible threats to Saudi oil production. Adding to the bear’s case is a report that Nigerian exports are expected to surge to well over 2 million bpd in May, up from 1.82 million in April. The G-8 has issued a statement that seemed to try to say everything and nothing at the same time. It called for “appropriate and strong steps” in dealing with the Iranian nuclear issue, but it did not mention sanctions and did mention remaining open to dialogue with Iran. If crude prices turn down from here, the chart action will reinforce the series of lower highs that has formed since the market put in its recent top on March 12th and would indicate that the market will likely turn lower. This would seem to make the March 17th high in May crude at 83.36 and the March 12th high at 83.47 critical. Key support levels are at Friday’s low of 79.54 and last week’s low at 78.86. Falling thru that second level could send the market back to 76.87.
GASOLINE: May RBOB also reached its highest level since March 18th on decent consumer spending data and the weaker dollar yesterday. Overnight it traded up near yesterday’s highs. US retail gasoline prices fell last week for the first time in six weeks, but this came after they reached their highest level since October 2008 the previous week. Gasoline margins on the board are still strong but have slipped off of their recent highs. If crude stalls or moves lower, then RBOB might find it difficult to break out above the consolidation of the past several weeks. Gasoline stocks have declined the past few weeks but they are still running well ahead of last year and the 15-year average. Key resistance for May RBOB comes in at the March 17th high at $2.3135.
HEATING OIL: Above normal temps expected in the Northeast today through the next 10 days suggest heating demand will be minimal. May heating oil rallied right up to its Mar 17th high of $2.1560 yesterday and is close to breaking out above the upper end of its consolidation range, but it may be difficult to do so without a breakout in crude oil or further draws to heating oil stocks. Key resistance May heating oil comes in at March 17th high of $2.1560 with support at $2.1072 and $2.0607.
TODAY’S ENERGY MARKET GUIDANCE: OPEC’s target price range of $70-$80 per barrel has traders skeptical that the market can move much higher from here.
Tags: Crude Oil, Energy, Gasoline, Heating Oil, RBOB
About Dave Hightower