Last week finally gave Crude Oil the break out momentum needed to push through resistance and ended a seven week period of range bound trading. After breaking through…
Last week finally gave Crude Oil the break out momentum needed to push through resistance and ended a seven week period of range bound trading. After breaking through 6558 on Tuesday the May contract continued to show strength as it traded as high as 6715 on Thursday before finally cooling by 52 cents on Fridays close. Unleaded and Heating Oil were the primary drivers of the market as inventories continued to report draws but remain in the extreme upper band of the 5 year average. Historic averages are not helping too much because demand for Unleaded is coming on strong for this time of the year while refineries are in their seasonal switchover mode. This could get much worse before it gets better and I expect it will. We are continuing to hold our 6750 to 7000 option spread at least through this week.
Natural Gas started out strong but eventually gave up its gains on Friday. We should see the market break through 765 over the next couple of weeks. Our Natural Gas Ladder Spread expired .01 away from the max profit target however the exit proved a bit tricky and ate up another .07 by time it was all over. Nevertheless we were very happy with that outcome and we are rolling into anther spread of the same construction for May.
Matt Odom 4/3/2006