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Daily Oil Prices – WTI Crude Oil Chart 16th April 2009

WTI Crude Oil Price Chart - Daily Oil Prices 16th April 2009

Yesterday EIA stats confirmed that crude oil inventories increasing by 5.6m barrels taking the stockpile to around 42m barrels, the highest level since 1990 and despite this bearish news, daily oil prices managed to hold in the current pennant pattern, which in itself could be construed as a positive signal for oil prices moving forward.   Reasons given for the failure to provoke a sell off in the price of oil included a move higher in stock markets coupled with continuing supply problems in the Nigerian oil fields.  In addition some analysts are pointing to possible evidence of a slight improvement in Chinese demand which could also discourage aggressive selling.

From a technical perspective oil prices initially headed higher breaking above both the 9 and 14 day moving averages, but this effort failed to hold and the day ultimately closed back below these two once again, but well above the 40 day moving average.    With the continuation of the pennant pattern now being formed on the daily oil chart we can expect an explosive reaction once the breakdown occurs, in much the same way as one would see with a coiled spring.  It is difficult to forecast when this will occur, one can only say that it will in due course and the move will be accompanied both with volume and momentum.   Given the strong support immediately below the current oil price, the likelihood is for a break to the upside, and the only way to trade this set up is to use a straddle option strategy which provides a directionless trade.

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

WTI:

Support:    $51.46 (yesterday’s low)                              Resistance: $55.79 (high of 03/04/09)

Support:    $50.15 (low of 08/04/09)                              Resistance: $54.69 (high of 14/04/09)

Support:    $49.05 (low of 01/04/09)                              Resistance: $53.30 (yesterday’s high)

OIL (BRENT):

Support:    $51.35 (yesterday’s low)                              Resistance: $54.10 (high of 14/04/09)

Support:    $50.65 (low of 07/04/09)                              Resistance: $53.59 (high of 08/04/09)

Support:    $49.80 (low of 08/04/09)                              Resistance: $52.87 (yesterday’s high)

DOE Stock Figures (change in millions bbls)

Crude    +5.6 (+2.1)      Gasoline -0.9 (-0.4)     Distillate -1.2 (-0.8)   Refining Capacity 80%