April Crude Oil

Discussion in 'Commodity Futures' started by PAPA ROACH, Mar 4, 2009.

  1. Crude had a solid technical close over the 45.30 recent high and should get legs to it for a fairly quick retest of the $50 resistance level. The biggest problem with crude right now is the ultra tight correlation with equity markets.

    What has peaked my interest the most in crude is the steep discount the WTI, (which is the NYMEX contract), is trading to heavier and more sour grades. There has been a discount to traditional grade spreads for a little while, but I think that is about to revert as our weekly imports are falling and gasoline demand is actually moving up.

    Also of note is Cushing has had a slight draw for the last 3 weeks, although still basically full, can likely draw down lower against our weaker imports. I believe this is one reason you have tightened the contango spreads recently as well.

    I am not ready to go out on a limb yet and say we are about to get a much larger rally, but I do think a correction of the grade spreads alone will cause the NYMEX to rally higher in the near term. The correlation trade is what can still piss on this fire though, so if equities melt down again, all bets are off.
  2. Well how CL closes the week will be key, last week we were right here and boom smacked down by equities:but China may make up for our incomptence by passing enough of stimulus (actual infrastructure builds) that will give commodites and the market a leading sector to invest in and move the market higher:it needs direction-but we need to break out right here, no more trading range below 45 /barrel.

    So lets break out and test where the next trading range will be maybe 45-51.

    I will be watching for (how strong do we go through 48 on the front month) for an idea if we can test 51 within 2 weeks.
  3. Hold on to your hats, I think Israel is on the cusp, timing wise, of attacking Irans nuke facilities. Shorts will be killed in oil. Chatter in Israel is making it seem imminent.
  4. kalki


    WTI is running. Is this due to Israel rumor. At the same time NG is dormant, i guess there is enough gas in the ground that market does not care?
  5. When Israel bombs Iran, BAC trades at $40.
  6. Wait, WTI is trading below heavier, more sour grades??? Or WTI is relatively less expensive than the sour grades at the moment?

    I must be looking at the wrong prices...
  7. When Papa Roach open this thread the Brent was trading a few box over the WTI fronth month, Now that spread is back in backwardation or normal levels.. In fact, Back in Dec and Jan contracts the WTI trade almost $8 dollar less than the Brent.

    The change in price differential since late November was due to a temporary shortage of refining capacity. A large stockpile of oil at the Cushing, Oklahoma storage and pricing facility depressed at the Cushing pricing point. As stockpiles reduced, the WTI price increased to exceed Brent once again. One of the reason is that the demand for gasoline in US has been growing over the last few weeks.
  8. Big day tomorrow, do we sell off hard to 42, or stay close enough to make a run at 50-51 level, the inventory report if its just inline with expectations, how does cl act, bigger draw in gasoline would probably ignite a quick run to 50 by wed/thursday.

    NG is local, Oil is global....even within us...ng prices are very regional.
  9. Thank you. Appreciate the info.
  10. well, CL didn`t react well to a couple of pretty irrelevant reports, eia forecast yesterday---------yad....yada...yada...and then basically, a status quo for inventories, cushing down, buil in other areas, but nothing news shattering, a bunch of longs took profit, as shorts had lined up at these point 48 area, and then all the uso rollover folks took advantage of that trade again.

    Interesting to check how far we come back before Friday`s close before the OPEC meeting, not too optimistic over the OPEC meeting, as Saudi seems to be reticent to really make a statement, and keeps talking about enforcing existing cuts, which is another way of saying, they are not going to really push the envelope while the economy is semi-weak, in other words, I think the Saudi`s may in fact like prices where they are, as they make a profit, and really hurt alternative energy projects, and the more expensive cash/cost per barrel producing countries like venezuela.
    #10     Mar 11, 2009