ENERGY INTRADAY

Energy Mar 07, 2008

Major Headline:

· Oil prices steadied Thursday after nearing a record $106 a barrel as investors reacted to a surprise drop in U.S. crude supplies and the dollar struck new lows against the euro.

· Also supporting prices was an OPEC decision not to boost output and rising tensions on Venezuela's border.

· Earlier this week, oil prices broke the previous inflation-adjusted price record of $103.76, set in 1980 during the Iran hostage crisis.

· Most analysts had expected the U.S. Energy Department's Energy Information Administration to report oil stocks rose last week for the eighth straight time. Instead, the stocks fell 3.1 million barrels.

· In Vienna, the Organization of Petroleum Exporting Countries said Wednesday it would hold production levels steady, at least for now. OPEC ministers cited falling demand in announcing their decision to hold production steady.

· The EIA report and OPEC announcement fed a new frenzy of investing in oil futures, which have risen to new inflation-adjusted records this week as the falling dollar drew investors to the market.

· The dollar, meanwhile, fell to a new low against the euro, with the EU's shared currency climbing to $1.5370 after the European Central Bank and the Bank of England left their benchmark interest rates unchanged. The euro set its previous high mark of $1.5302 on Wednesday.

· Analysts noted that U.S. oil inventories are at historical highs despite last week's decline in crude supplies. Meanwhile, demand for gasoline is falling, and several forecasters have cut their oil demand growth predictions for this year.

· Traders also worried about escalating tensions between oil producing countries in Latin America. Following a weekend attack by Colombia on leftist rebels in neighboring Ecuador, Venezuela moved tanks and soldiers to the Colombian border. Ecuador said Monday it had sent 3,200 soldiers to its border with Colombia.

Weekly Inventory Update:

· The U.S. Department of Energy said that underground supplies of natural gas were down 135 billion cubic feet to 1.484 trillion cubic feet. Supplies are now down 10% from a year ago. May natural gas is steady.

MCX Crude Oil March

Technical Outlook:

Momentum studies are bullish but are now at overbought levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Crude Oil March: Buy at 4185 Target 4280 and 4320 Stop loss at 4155

MCX Natural gas March

Technical Outlook:

Momentum studies are bullish but are now at overbought levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Natural Gas March: Buy at 390 Target 397 and 406 Stop loss 386.50

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