Thursday, February 23, 2012

Nymex crude oil: Still Upside Bias

Commodity to watch: Nymex crude oil

Nymex crude oil: Still upside bias

Crude oil prices jumped to a 9-month high above US$106/barrel after the International Atomic Energy Agency officials were denied access to an Iranian military base and said negotiations over the country’s nuclear program “couldn’t finalize a way forward.” Earlier, oil prices dipped to US$105/barrel on reports that manufacturing activity slowed in Europe and China, suggesting that fuel demand may decline.

Having said that, high crude oil prices are likely to be sustainable in the short term amid escalating tensions between Iran and Western nations coupled with liquidity injection since Dec 11 which spurred big infusion of speculative capital into riskier assets. Iran said earlier this week that it stopped selling crude to France and Britain in a move designed to pre-empt European sanctions. The European Union on 23 Jan agreed to ban crude imports from Iran starting 1 July to pressure the country over its nuclear program.

Looking at the chart, if prices can maintain above the long term downtrend line since all time high in June 2008 (US$145/barrel), it may continue to climb towards US$115/barrel after a brief sideways profit taking consolidation. Further resistance is US125/barrel (23.6% FR). Immediate supports are US$94-100.

Daily Oil - Rally May Continue For A While After The Saucers Formation
Nymex Crude Oil 23-02-2012

Weekly Oil - A Breakout Above The Downtrend Line Will Spur Greater Heights
Nymex Crude Oil 23-02-2012a


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