Crude continues to confound most analysts it seems, as they are still talking about prices much lower – one big firm even making a “prediction” out years into the future that crude will be in the low 30’s – even as price continues to trend higher.
Analysis 101 – an up trend is a series of higher swing highs and higher swing lows:
Crude, Continuous Contract – Daily – the definition of an up trend, so far unbroken.
Its not over until its over. What we look for at a chance of trend is for a range to develop (check) and for price to fail to hold the bottom of the range and start to trend below.
Despite growing inventories of raw crude, price plummeted and then rebounded stronly intraday. Stock markets yesterday seemed not to note this reversal, but no doubt will today, as price is up pre-market almost 2%.
Summary of Weekly Petroleum Data for the Week Ending March 25, 2005
U.S. crude oil refinery inputs averaged nearly 15.2 million barrels per day during the week ending March 25, up 222,000 barrels per day from the previous week’s average. Refineries operated at 91.1 percent of their operable capacity last week. Gasoline production decreased slightly last week, averaging nearly 8.2 million barrels per day. Distillate fuel production increased slightly last week, averaging 3.9 million barrels per day.
U.S. crude oil imports averaged nearly 10.6 million barrels per day last week, up 298,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged over 10.2 million barrels per day, which is 288,000 barrels per day more than averaged over the comparable four weeks last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) averaged 0.9 million barrels per day last week, while distillate fuel imports averaged 258,000 barrels per day.
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) rose by 5.4 million barrels from the previous week. At 314.7 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories dropped by 2.9 million barrels last week, but remain above the average range. Distillate fuel inventories fell by 1.1 million barrels last week, and are in the lower half of the average range for this time of year. While most of the decline was in low-sulfur distillate fuel (diesel fuel), high-sulfur distillate fuel (heating oil) also declined. Total commercial petroleum inventories moved up by 5.5 million barrels last week, and remain in the upper half of the average range.
Looking at the raw data (also available in the EIA site) its clear there is a ton of oil being pumped into the system. Refinery capacity is one real issue for gasoline consumers; the other primary issue is that demand continues to grow week in, week out. So while stocks are in the upper half of average ranges for this time of year, demand is above average and shows no sign of slowing.
There’s a report out today from Goldman Sachs also contributing to oil fever:
“We believe oil markets may have entered the early stages of what we have referred to as a “super spike” period [rising as high as $105 a barrel]—a multi-year trading band of oil prices high enough to meaningfully reduce energy consumption and recreate a spare capacity cushion only after which will lower energy prices return,” Goldman’s analysts wrote.
In addition to stocks singled out in today’s Swing Trade Setups, we could consider the ETF’s for the sector:
XLE – Energy ETF
OIH – Oil services ETF – here I would prefer to trade individual names, perhaps RIG:
RIG – stuck in congestion but since its aged now I may be tempted today to trade above yesterday’s down bar.
05.03.31 09:22 #