From January 6, 2007 I will begin to post my analysis of the crude oil futures market traded on the New York Mercantile Exchange. The posting will be made on an "as-necessary" basis. On Fri., Jan. 5 the crude oil futures market clearly ran into a strong support at $55.00 and closed at $56.31, $1.41 higher than the day's low of $54.90. The weekly continuation chart for the front-month crude oil futures shows that the market has been holding above $55.00-$55.50 support fairly well since the week ending on July 1, 2005. The market will hold above $55.00-$55.50 support again this time even though the market sold off on Wed. and Thurs. for a $5.48 loss for the biggest two-day drop since the $5.88 drop on Dec. 1 and Dec. 2 of 2004 as if today were sometime in March with the winter already behind. But the winter will arrive, and the market will rally on the forecast of any cold weather arrival. Moreover, the geopolitical tensions in Iran, Nigeria, Iraq have shown no sign of abating. These geopolitical tensions along with OPEC's proclaimed 500,000 barrel per day production cut to be implemented on Feb. 1, however incredible it may be perceived by the market, will provide support for the market at $55.00. In the near term the market will again trade sideways as it did between Nov. 28 and Dec. 22 at $60.50-$64.50, except that the market will trade in the range of $55.00-$60.00. Strategy: Long at $55.70 or below with a stop at $54.40; take profit at $59.50 or above. (Maximum risk $1.30, minimum expected profit $3.80). Dr. Chen