Energy

Energy


Major Headline:

Crude oil fell for a second day on concern demand will stagnate, as strengthening inflation in the U.S. may curb any further interest rate cuts.

Oil has dropped 8 percent from a record in November on signs of weakening demand. U.S. Consumer prices rose more than forecast last month, driven by higher energy costs, a government report today showed. The Federal Reserve voiced concern that inflation may gain when it cut interest rates earlier this week.

The International Energy Agency increased its estimate of 2008 world oil demand to 87.8 million barrels per day (mbd), higher than the U.S. Department of Energy's estimate of 87.2 mbd. Either way, it is going to be interesting to see how (or if?) producers keep up. February crude oil closed down .91 at $91.55 with serious concerns about a slowing U.S. economy.

While the northeastern U.S. digs out from yesterday's heavy snow, a mix of rain and snow will fall on winter wheat country in the south central plains today and eventually bring more snow to the Northeast by Sunday. February heating oil closed down 1.03 cents at $2.6009.


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 and 18 days moving average. The downside closing price reversal on the daily chart is somewhat negative. Over all technical suggest a bullish market and prices are expected to go further up.

Recommendations:

MCX Crude Oil Jan: Buy at 3560-70 for target of 3655 and 3680 with stop loss below 3535

natural gas
Technical Outlook:

Momentum studies are bearish but are now at oversold 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 and 18 days moving average. The downside closing price reversal on the daily chart is somewhat negative. Over all technical suggest a bullish market and prices are expected to go further up.

Recommendations:

MCX Natural Gas Jan: Sell at 285-290 for the target of 275 and 265 with stop loss at 310