comex crude outlook

Oil futures bounce back above $128 a barrel
06 June 2008 12:30:15



Oil prices climbed over $5 yesterday, erasing two days of sharp losses, and settled above $128 a barrel.



Light, sweet Crude oil July in NYMEX settled at $128.22 ($122.30), after trading in the range $121.61 - $128.38.



US Crude supplies had dropped by 4.8 million barrels to 306.8 million for the week ended May 30, according to the release by US Energy Department on Wednesday, taking the total fall in supplies in three weeks to around 19 million barrels.



Better-than-expected data from the US manufacturing sector early this week had helped to temporarily ease concerns over slowing demand for oil from the largest energy consumer.



Potential supply threats due to geo-political tensions and the Atlantic hurricane season, expected demand from China and OPEC’s unwillingness to increase output despite high prices continue to underpin oil prices.



The Atlantic hurricane season officially began on June 1st. Arthur, the first Atlantic storm of the season, made landfall on Sunday near Mexico forcing the closure of two export terminals, but afterwards weakened to a tropical depression creating heavy rains in the Gulf of Mexico.



Another attack on Nigerian oil facilities had refocused concerns on immediate supplies. Production was partially disturbed after militants attacked a major oil pipeline owned by Royal Dutch Shell in the Niger Delta last week.



Meanwhile, Iran has cut its crude oil exports by 200,000 barrels a day since February 20 due to a seasonal fall in demand for crude oil during the refinery maintenance period. Iran is the world's fourth biggest oil exporter, currently producing around 4 million barrels a day, of which roughly 2.5 million barrels a day is exported.



On the supply side, ministers from the OPEC have indicated any output increase from the cartel remains unlikely, as it continues to blame record prices on speculation, geopolitical factors and the dollar's decline, rather than a lack of crude in the market.



DWTI (July) traded in the range $122.00 - $128.12 and closed at $128.18 ($122.68).





Weekly Outlook (NYMEX Crude oil July)



$126.49 might act as a major support followed by $125.10, $121.90 and $118.30. Resistances are $130.49, $133.65. Trading below $125 may lead towards $118.30.


TECHNICAL OUTLOOK (Intra-day)


DGCXCrude (July) - Bullish above 128.90; bearish below 128.20