February Crude Oil was down $0.50 on the close Wednesday at $37.28. Wednesday the government inventory report showed another buildup in stocks, particularly in distillates, which rose an unexpected 6.4 million barrels while the market was looking for a buildup of 1.1 million barrels. The stocks in Cushing, OK (the delivery point for futures) showed an increase to a new all time high of 33 million barrels of crude. The market is talking about how bearish the distillate numbers really were, pointing directly to weak industrial demand.
*** WE HAVE SEEN A 20% INCREASE IN HEATING OIL PRICE FROM THE CLOSE ON CHRISTMAS EVE TO TODAY'S CLOSE ***
Technical Commentary: Technically, the market is still in a long-term downtrend and rallies are to be sold. With that in mind, if the March contract is above $40 by month's end, the downtrend will be broken. Close-in support in February will be Wednesday's low of 35.52 with 32.50 and 30 as further support. The contract low is 35.13. The market has made lower highs and lower lows for six consecutive sessions. We broke out of a consolidation wedge, which now projects February crude to 25.00, which is where some major financial institutions still have their objectives. Close-in resistance is 39.38 with 40, 43.50, 45.80, and 49.55 as further resistance levels. An inverse head and shoulders bottom is still possible and looks clean on the March chart, but we need a move through 55 to confirm it. Allendale's the next schedule projected major turn day in crude is January 16.
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