Crude Oil found itself range bound once again last week, trading between 58.75 and 62.15. The EIA report that was released on Wednesday reflected a stronger than expected build in Crude and Unleaded and even showed a lesser than anticipated draw on the Distillates (Heating Oil and Diesel)…
While the demand figures came in 1.8% lower than the same time last year, they still showed an increase from with respect the the latest 4 week average. In a nutshell this means that demand seems to be on the way back from the doldrums since prices at the pump for Unleaded have dropped more than 30% over the past few weeks.
So once again we are dealing with mixed signals from the supply and demand picture. Put that together with the warmer than expected temps across the nation and the struggling refinery restarts in the West and you get what we have seen of late, range bound markets. This is not a good sign for the Bears as we head into the winter. While refining capacity should improve week after week, I’m less inclined at the moment to think that the market will react sanely to a cold snap or any signs of surging demand for Unleaded. The truth is that we are awash with Crude at the moment and demand is soft but the market seems to be supportive any time sellers enter the market. I think if we mix any bullish fundamental data with the current technical picture, we will be headed back to the upside. At this point I’m looking for a break through resistance or support for Crude on a closing basis before I’m sold on any direction. Matt Odom 11-04-05
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