I’m not admitting defeat on this one but I may have called the break through 7000 just a little prematurely. This being a long weekend and with the feverish pitch of the rhetoric abroad (Iran, Nigeria and Venezuela in particular) I fully expected the Crude Oil market to have all the momentum necessary to break to new highs…
Instead we saw profit taking dictate a soft market on Wednesday and Thursday until strong buyers came in late in the day on Thursday to rally the market ahead of the long weekend. I expect to see this market remain comparatively timid as we head into the beginning of next week unless we hear more bad news from our associates in Iran or elsewhere.
If the world would just stand still for a couple of weeks then we would probably see a softening energy market. But the likelihood keeping a lid on all of the geo political situations at the same time is almost zero. I’m also very concerned that the Unleaded and Distillate inventories are going to continue to decline as we head into the driving season and this is obviously going to be supportive for the complex as we move forward. So my near term outlook for Crude Oil is that we will see the market come on soft in the beginning of the week and with any bad news, begin to rally back towards resistance by weeks end. We exited all of our May Crude Oil Bull Call Spreads for 1.10 on Thursday. Needless to say we were very happy with that fill.
Also of note, the Natural Gas market is seriously oversold here and as soon as the A/C units start humming in the Midwest this coming week I think we will start to see the market begin to trend upward once again. Matt Odom 4/14/2006