Energy Prospectus

May Crude Oil prices experienced a choppy morning session but an afternoon rally took the market to a new four day high. The market registered a new low on the session shortly after the New York opening but recovered ahead of this morning's EIA report. EIA crude stocks rose 250,000 barrels, which was quite a bit smaller than the 1.5 million barrel increase that was expected. Some of that smaller build came from a pullback in imports, which stood at 7.72 million barrels per day compared to 7.931 million barrels the previous week. The refinery operating rate was up 0.5% to 86.8%. A rally in US equity markets into new contract highs was seen offering late day support to the crude oil market.

a head and shoulders is forming on wti. if today's trades close below 92 the neckline will have been penetrated confirming the H&S. target would be in the 86-87 neighborhood.

no guarantees.

For now I will stay with $85 oil in all my forecast models but I am going to increase natural gas to $4/mcf. RRC and UNT are the biggest winners if I'm right about gas.

dan_s wrote:For now I will stay with $85 oil in all my forecast models but I am going to increase natural gas to $4/mcf. RRC and UNT are the biggest winners if I'm right about gas.

Dan, If we were north of $90 all of Q1 - an average of $85 would require some ugly numbers ahead. Ergo it would seem your estimates are very conservative.

Bpb

It is better to be conservative this early in the year. I don't expect oil to drop below $85/bbl but it is better to be safe than sorry.