Crude Comment 14/05/09

Overview:

Despite expectation of a small increase in crude stocks, yesterday's EIA stats showed a large draw in inventories which ‘normally' should have a bullish impact. However the energy complex was quick in dismissing the data reiterating the abnormal current conditions which seems set to disregard its own fundamentals (last week the EIA stats were bearish and oil price went up). So crude was met with a sharp sell off which again was largely driven by a strengthening US dollar and a tumbling equity market suggesting that optimism rather than reality and financial / currency markets remain the dominant forces.

9 day moving average - $56.97 14 day moving average - $54.73 40 day moving average - $52.13

Technical Report:

In early trading crude moved up reaching an intraday high of $59.87 but failure to break above the $60.00 mark was quickly followed by a sharp decline. After an impressive 2 weeks rally which saw a 10 dollars gain ($50.00 - $60.00) yesterday's move which finished $1.73 down settling at $57.70 was somewhat expected. Technically the chart shows the moving averages still bullish, placed below the market price which could suggest rather an overdue correction.

The short term trend is bullish, the medium term trend is sideways and the long term trend is bearish.

WTI:

Support: $57.40 (yesterday's low) Resistance: $61.06 (high of 11/11/08)

Support: $56.80 (low of 11/05/09) Resistance: $60.06 (high of 12/05/09)

Support: $55.42 (low of 07/05/09) Resistance: $59.87 (yesterday's high)

OIL (BRENT):

Support: $56.88 (yesterday's low) Resistance: $61.98 (high of 10/11/08)

Support: $56.31 (low of 11/05/09) Resistance: $59.43 (high of 07/11/08)

Support: $55.43 (low of 07/05/09) Resistance: $59.05 (yesterday's high)

We rolled our feed from June to July yesterday at the following levels:

GSO: June $483.75 July $493.25 Rollover Rate: $9.50

OIL: June $57.34 July $58.12 Rollover Rate: $0.78

WTI: June $58.02 July $58.97 Rollover Rate $0.95

DOE Stock Figures (change in millions of barrels)

Crude -4.7 (+1.3) Distillates +1.0 (+1.3) Gasoline -4.1 (unchanged)