The 14% jump in oil prices over the last week has come during growing optimism that the worst of the global economic downturn has passed. Recent economic data has showed the rate of decline in the U.S. economy slowing, including a Labor Department report Thursday showing fewer new jobless claims last week than economists forecast in a Dow Jones Newswires survey. Leaked results of a government stress test of major banks are also assuaging concerns about further instability in the financial sector. The evaluation is expected to show that some of the nation's largest financial institutions need to raise additional capital to cover potential future losses, though not to the extent many investors had feared. The official release for the stress test results is scheduled for 5 p.m. EDT, after crude futures will have settled on Nymex. This new optimism is fueling an "appetite for risk," which has sent cash flowing into the oil market, said Peter Beutel, president of Cameron Hanover, a trading advisory firm. "Instead of trying to find something that is a safe haven, people are now looking at some assets that maybe are able to get higher returns," Beutel said. To make that leap, traders are downplaying the current dynamics within the oil market itself, including U.S. inventories at an 18-year high and demand that is still declining. A rally based solely on a slower decline in the wider economy, and without a draw on inventories or increase in oil demand can only go so far, analysts said. "Of course, none of these (economic) factors have anything to do with the fundamentals of the oil market," wrote Addison Armstrong, an analyst with Tradition Energy, in a note to clients. "Crude futures are now .. overbought and should consolidate above $54 for now." Light, sweet crude for June delivery traded $1.87, or 3.3%, higher at $58.21 a barrel on the New York Mercantile Exchange, with the intraday peak of $58.44 a barrel the highest price seen since Nov. 17. Brent crude on the ICE futures exchange traded $1.68 higher at $57.83 a barrel. Front-month June reformulated gasoline blendstock, or RBOB, recently traded up 6.60 cents, or 4.1%, at $1.6940 a gallon. June heating oil traded 4.97 cents, or 3.4%, higher at $1.5210 a gallon.
b/e at 56.77, will try to hold on until then. though i'll probably cash out if we spike up at all. what was the cause for this down move? it probably tripped alot of stops and triggered some counter-trend systems right?
I always use stop but did not used on this one. I have my reasons which I dont have the time to explain here. I am long 10 lots from 5725 avg rate and looking for 5990