Daily Oil Prices - WTI Crude Oil Chart 30th April 2009

Yesterday’s EIA report showed a surprisingly large draw in gasoline stocks which counterbalanced another sizable build in crude oil supplies even pencilling in a bigger than expected increase. So once again it was left to a strong advance in the equity markets and additional weakening in the US dollar to provide assistance for crude oil prices, and as result of renewed buying interest in the energy complex, with crude oil prices being dragged higher following the release of the GDP data, which came in at -6.1% against a forecast of -4.8%. In normal times, such figures would be greeted by the markets with horror, and yet in today’s unpredictable climate, this triggered a positive response with a return of risk appetite and consequent rise in equities, which seems to be symptomatic of the markets at present, which are constantly looking for the good news story, wrapped within the bad! Yesterday’s silver lining was the reduction in public spending which sent the broader markets higher and lifting oil prices as a result. Ironically however,one has to look back over 50 years to find a worse 6 month economic performance in the United States than that of the last  two quarters, and while the signs are that the current second quarter will create the longest and deepest recession in history, investors are reacting to the fact that businesses have cut their inventories dramatically, thus ensuring a shorter delivery time between final demand and manufacturing production as businesses will need to physically manufacture and produce in order to fulfill new orders. Again, another piece of good news that the markets have seized upon with relish!

From a technical perspective, daily oil prices moved higher yesterday gaining $1.31 for the day to settle at $50.76 and with a mere 39 cents difference between the moving averages it was easy to see a cross above all these indicators. So although crude managed to breach and hold above the $50.00 mark the convergence of all three moving averages provides little in the way of meaningful analysis at present from these indicators, which must therefore be treated with a degree of caution. On the upside the next target is at $52.44 last seen on April 9th followed by the March end highs at just below $55. However a decline back to the moving averages is a possible outcome if oil runs out of steam here as the $45-$55 range is still firmly in the picture. Trading in all markets is extremely difficult at present, partly due to the current flu pandemic, and partly to the current perverse view of the markets to any news outlined above, so to trade spot oil, we need to be extremely careful in the next few weeks. My trading suggestion for today is therefore to attempt small long positions on an intra day basis using the 15 minute and 30 minute charts, a view reinforced in early oil trading this morning with a gapped up opening in the daily oil chart.

The short and medium term trends are sideways, the long term trend is bullish.

WTI:

Support:    $49.15 (yesterday’s low)                              Resistance: $52.87 (high of 02/04/09)

Support:    $48.57 (low of 28/04/09)                              Resistance: $52.44 (high of 09/04/09)

Support:    $47.73 (low of 22/04/09)                              Resistance: $51.63 (yesterday’s high)

OIL (BRENT):

Support:    $49.25 (yesterday’s low)                              Resistance: $53.06 (high of 02/04/09)

Support:    $48.40 (low of 27/04/09)                              Resistance: $52.09 (high of 24/04/09)

Support:    $47.47 (low of 31/03/09)                              Resistance: $51.28 (yesterday’s high)

DOE Stock Figures (change in millions bbls)

Crude    +4.1 (+2.2)      Gasoline -4.7 (-0.2)     Distillate +1.8 (+0.7)