Crude Oil Prices - October 1
Posted: Wed Oct 01, 2014 9:42 am
Here is what our friends over at Raymond James had to say about WTI price movement this morning.
"There is still quite a bit of fear surrounding practically
anything tied to oil at the moment and yesterday’s trading did little to
alleviate those concerns. Anyone banking on a crude oil bottom was
sorely disappointed after it fell more than 3% and continued to dutifully
play the role of a falling knife. From a technical perspective, long-term
support won’t really come into play until the $85-86 range if the early
September lows are violated, so those still hoping for a rebound will be
watching the area around $89 very closely. And of course, while oil
tanks, the U.S. dollar seemingly has its sights set on the moon. Weak
eurozone inflation data for September elevated the expectancy for
some sort of new stimulus measures in Europe, which would
theoretically drive down its rates while making the U.S.’s look relatively
more attractive. This news contributed to a spike in the already hot
Dollar Index, which is now at its highest point in four years and just
finished with its largest quarterly gain in six years. Fundamentally, this
does seem to make sense; while currency rates are complicated and
much goes into their movements, for the most part they are tied to the
outlook of a country’s economy and the U.S. does still appear to be
moving in the right direction, especially vis-à-vis Europe. Looking at the
charts, the dollar has now risen for eleven straight weeks and should be
due for a pullback. It is now at resistance, but if it breaks through, the
next likely resistance spot does not come into play until around $89."
My take is that since mid-August WTI has been flopping around $93 (see http://www.cmegroup.com/trading/energy/ ... crude.html). Dips during that time have been tied to the rising U.S. dollar index. If WTI crawls back to $93 by the end of this week, we should be OK. Winter is on the way and so is a lot of demand for heating oil. - Dan
"There is still quite a bit of fear surrounding practically
anything tied to oil at the moment and yesterday’s trading did little to
alleviate those concerns. Anyone banking on a crude oil bottom was
sorely disappointed after it fell more than 3% and continued to dutifully
play the role of a falling knife. From a technical perspective, long-term
support won’t really come into play until the $85-86 range if the early
September lows are violated, so those still hoping for a rebound will be
watching the area around $89 very closely. And of course, while oil
tanks, the U.S. dollar seemingly has its sights set on the moon. Weak
eurozone inflation data for September elevated the expectancy for
some sort of new stimulus measures in Europe, which would
theoretically drive down its rates while making the U.S.’s look relatively
more attractive. This news contributed to a spike in the already hot
Dollar Index, which is now at its highest point in four years and just
finished with its largest quarterly gain in six years. Fundamentally, this
does seem to make sense; while currency rates are complicated and
much goes into their movements, for the most part they are tied to the
outlook of a country’s economy and the U.S. does still appear to be
moving in the right direction, especially vis-à-vis Europe. Looking at the
charts, the dollar has now risen for eleven straight weeks and should be
due for a pullback. It is now at resistance, but if it breaks through, the
next likely resistance spot does not come into play until around $89."
My take is that since mid-August WTI has been flopping around $93 (see http://www.cmegroup.com/trading/energy/ ... crude.html). Dips during that time have been tied to the rising U.S. dollar index. If WTI crawls back to $93 by the end of this week, we should be OK. Winter is on the way and so is a lot of demand for heating oil. - Dan