Crude Oil continued to show signs of weakness this week even while faced with news of the first inventory drawdown in over a month from the EIA report released Wednesday.
The seemingly bullish data however was not enough to eclipse the surprising build numbers for the Distillates (Heating Oil, Diesel, Jet Fuel). With hefty Heating Oil supply builds the Crude Oil market was finally able to break down through support at 55.75 on an intra-day basis during Friday’s trading.
Winter is here as of this weekend and it is expected to stick around this time. That being said, most analysts are awaiting the next couple of EIA reports to see if the Distillate refineries that are running at 86% capacity at this time can keep up with the inevitable increase in demand. This next report however should not reflect the new chilly conditions that struck on the way into the weekend so it is reasonable to think that we may see more Bears in the market for the next week. I expect to see a run up in the Crude Oil market of 1.00 to 1.50 ahead of the next inventory report this Wednesday because of either the anticipation of possible bullish EIA data or the technical bounce that typically occurs after the market breaks any real areas of support. Matt Odom 11-18-05
Odom & Frey Futures & Options