In Wednesday’s trading session, Crude Oil and the rest of the energy complex closed the day much higher on bullish inventory data, the further weakening of the dollar, and news of conflict in Iraq. According to the department of energy, we had a bigger than expected drop in gasoline and heating oil inventories with crude inventories unchanged.
Upon release, traders rushed in the market pushing prices higher across the board. How the energy complex fared on the day; Crude Oil rose $4.68 to settle at $105.90 a barrel and Nat Gas dropped a penny to close at $9.55 per 1000 cubic feet. In other NYMEX trading, heating oil futures rose by close to 3 cents to $3.07 a gallon (3.8 liters) while gasoline prices corrected by just over a penny to $2.7313 a gallon.
Intraday, Crude Oil closed in on $108 a barrel on news of a pipeline explosion in Basra, Iraq. The Basra is home to Iraq’s three largest oil pipelines and is considered to be a key export hub with 80% of Iraqi oil production passing through it.
Early in Thursday’s session, we see a slight pull back in prices do to a stronger dollar caused by a better-than-expected PCE number.
So, how do you trade this market...?
Crude Oil, on a technical basis retested the support level of 99.98 in Tuesday’s session and has since bounced of and moved higher, as per my article “keep your eye on crude”. If crude breaches the 1st resistance level of $107.08, it will then trade up to the 2nd resistance level of 108.73. If it closes higher than the 2ND resistance it could trade up to $110. If so, the next key technical level is the all time high of $111.80 a barrel. Traders should take advantage and buy the dips adding to their net long position. And with two straight weeks of RBOB Draw downs, in a time when there should be builds to prepare for driving season, I am watching that market to see what materializes.
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