Crude Oil Commentary

Overview:

Following the recent rally in crude it's becoming increasingly evident that the whole energy complex is once again perceived as an ‘asset class' especially with interest rates virtually zero. And while a steady tone in the equity markets remains supportive the main drivers pushing crude prices higher are now a fast declining US dollar (even comments by Treasury Secretary Geithner could not stop it) combined with technical factors. So today's EIA stats are expected to offer limited value in assessing near term crude price direction no matter the outcome.

9 day moving average - $64.95 14 day moving average - $63.05 40 day moving average - $56.17

Technical Report:

The early trading appeared to signal that crude would stop for a breather after the impressive rally of the last few days. But that proved to be a false alarm and crude continued its advance even crossing above the $69.00 level. However, failure to hold at the new found record was followed by a slight decline towards the close of a choppy trading session. Overall crude managed to gain another 35 cents settling at $68.20 and the technicals continue to support this current bullish trend.

The short and medium term trends are bullish and the long term trend is bearish.

WTI:

Support: $67.51 (yesterday's low) Resistance: $70.53 (high of 30/10/08)

Support: $66.40 (low of 01/06/09) Resistance: $69.21 (high of 29/10/08)

Support: $64.74 (low of 29/05/09) Resistance: $69.04 (yesterday's high)

OIL (BRENT):

Support: $67.05 (yesterday's low) Resistance: $70.15 (high of 16/10/08)

Support: $65.49 (low of 01/06/09) Resistance: $68.87 (high of 22/10/08)

Support: $63.96 (low of 29/05/09) Resistance: $68.55 (yesterday's high)

DOE Stock estimates (change in millions of barrels)

Crude -1.6 Distillates +1.2 Gasoline -0.1