energy intraday

Energy: Oil markets could weaken
09 June 2008 09:49:04

Oil Prices pushed record high on NYMEX at $138.74 a barrel after Morgan Stanley analyst Ole Slorer said he expected strong demand in Asia that could drive prices to $150 by July 4. Shipments from the Middle East are mimicking patterns seen in the third quarter last year, when Morgan Stanley based its "oil price spike" predictions on Atlantic Basin draws.

Global demand, especially for gas and distillates in emerging markets, supported the record build in crude prices. However, the governments of a number of countries, such as India and Malaysia, have started lifting their government fuel subsidies, prompting gas prices to rise in those nations. Israel said an attack on Iranian nuclear sites is unavoidable, and according to Flynn, geopolitical tensions in the region also pushed the price of oil higher.

The dramatic reversal in what had been a weakening oil market began Thursday after ECB President Jean-Claude Trichet suggested the bank could raise interest rates and the euro climbed against the dollar. When interest rates rise in Europe, or fall in the U.S., the dollar tends to weaken against the euro.

Many investors tend to buy commodities such as oil as a hedge against inflation when the dollar is falling. Also, a weaker dollar makes oil less expensive to investors dealing in other currencies, and analysts believe the dollar's protracted decline has been a major reason why oil prices have nearly doubled in the past year.

The U.S. Dollar Index was last down 0.8% at 72.435, amid concerns over a potential rise in rates in Europe, and following the U.S. Labor Department said May nonfarm payrolls fell by 49,000 and the unemployment rate rose to a 4-year high of 5.5%. Crude got a lift after an Israeli official said an attack on Iranian nuclear sites looked unavoidable.

The U.S. Oil Fund ETF (USO) leapt to an all-time high on heavy volume Friday, as a weak U.S. dollar, increasing tension in the Middle East and a bullish analyst call fueled buying interest.

Natural gas advanced near the highest in 29 months after crude oil surged and the Near-record high temperatures in the Northeast and Midwest will spur cooling demand, prompting increased electricity output to run air conditioners. Daytime highs in New York will be 95 degrees Fahrenheit (35 Celsius) this weekend, before rising to 97 on June 9, according to the U.S. National Weather Service.

MCX Crude Oil June - Technical Outlook:

Tech The daily stochastic have crossed over up which is a bullish indication. The stochastic 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 EMA. The downside closing price reversal on the daily chart is somewhat negative.

Technicals have turned neutral to bullish and market is expected to remain positive above 6073 level. If sustain above this level can see a rally towards 6237 and 6523 If market sustains below 5787 can see a further fall towards 5623 and 5337

Recommendations-MCX Crude Oil June: Buy at 5895 Target 6070 and 6150 Stoploss 5843

MCX Natural gas June - Technical Outlook:

The daily stochastic have crossed over up which is a bullish indication. The stochastic 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 EMA. The downside closing price reversal on the daily chart is somewhat negative.

Technicals have turned neutral to bullish and market is expected to remain positive above 552 if sustain above this level can see a rally towards 558 and 567 If market sustains below 543 can see a further fall towards 537 and 528

Recommendations-MCX Natural Gas June: Buy at 538 Target 547 and 558 Stop loss at 533.50


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