Oil Comment

Technical Repor t :

We had another ‘outside day’ yesterday with a close well below Monday’s low which is a very bearish chart pattern. Another bearish factor is that we crossed down and closed below the 100 day moving average, the first time we have been below that since early February. The fact that we took out the low of 05/06/08 ($121.32)is a worry for the long term trend as we need to see higher peaks and troughs for the trend to remain intact .

The short and medium term trends are down while the long term trends remain bullish.



Support: $120.88 (Yesterdays low) Resistance: $130.50(low of 10/06/08)

Support: $117.56 (high of 25/04/08) Resistance: $126.79 (yesterday’s high)

Support : $114.31 (low of 05/05/08) Resistance: $126.61 (9 day moving average)



Summary:


Earlier in the month the news of explosions in two pipelines in Nigeria would have sent us to t he moon. Especially with Shell calling Force Majeure on Nigerian shipments, the continuing concerns of the Middle East and Hurricanes flying around but we broke through major support on the basis of a strong dollar and a technically weak chart . As mentioned before it is not so much the news but how the market reacts to it that is important and we can see that there is not a great appetite for Oil at the moment and the continuing bearish technical picture should suggest a further test of support levels. As always on a Wednesday, the DOE stats could send us rapidly in any direction.


DOE Stock Estimates (Change in millions bbls)


Crude -0.9 Gasoline +0.1 Distillate +1.7

Oil Comment

This technical summary as for the seventh consecutive day we have made new all time highs and this market is showing no signs of relenting. With all of the moving averages pointing upwards and the current short term bull trend still in tact, the chart is showing no obvious signs of weakness. The 9 day moving average at $105.03 is still expected to be a key support indicator, beware this is over $2.50 dollars below current trading levels.
The moving averages and short, medium and long term trends all remain bullish.


Support: $105.56 (low of 13th March) Resistance: $110.00
Support: $105.03 (9 day moving average) Resistance: $109.00
Support: $102.29 (high of 03/03/08) Resistance: $108.02 (all time high)


Summary:

In terms of oil it seems at the moment that “no news is bad news”. The potential slowdown in demand due to the impending credit crunch appears to be sending even more fund and speculative capital into this market. A month or so ago news of a major US bank (such as Bear Stearns)in trouble would have sent oil hurtling downwards, but oil still seems to be negatively correlated to the stock markets. The weak dollar (not helped by the overnight rate cut) is still a major focus and continues to bring in fresh buy orders. Fridays rally showed us that shorts were very uncomfortable to run these positions over the weekend and the speculative players are certainly seeing more danger to the upside.