As the chart pattern mentioned yesterday predicted, prices fell nearly $5 as the current downtrend continues. The psychological level of $100 was breached but the market managed to rally enough to close above that level, which will give some hope to the bulls. The market is stronger this morning but still trading in the lower half of yesterday’s range and if new lows are made today a test of the important $85 level, which is required to hold for the long term uptrend to remain in tact, is on the cards.The short and medium term trends are bearish and the long term remains bullish.
- Support: $98.34 (Yesterday’s low) Resistance: $106.76 (downtrend line)
- Support: $98.50 (high of 20/03/08) Resistance: $106.30 (9 day moving
- Support: $98.00 (low of 03/01/08) Resistance: $103.62 (Yesterday’s
OPEC announced a production cut of what will amount to 520,000 barrels a day this morning, which will come into effect in 40 days time. Hurricane Ike is gaining strength and heading towards the Mexican Gulf . Estimates for the release of today’s DOE figures are large draws in both Crude and the Products. Yet at time of press we are only trading up less than a Dollar from settlement. Why? Well the draw in stocks, if that is what we will see, is well expected as it will reflect the shutdowns last week due to Gustav. Traders will be aware that the OPEC increase is relatively small and that the producing countries do not have a good record at sticking to the Quotas. The underlying market weakness is not a production issue at all but is a product of the falling world demand.
DOE Stock Estimates (Change in millions bbls)
Crude -4.8 Distillate -2.2 Gasoline -4.3