| Are Oil Prices... |
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| martedì 29 agosto 2006 | |
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Are Oil Prices Finally Running Out Of Steam? Crude oil prices slumped again Monday as concerns over Tropical Storm Ernesto waned, although support has again been found just in front of $70 per barrel. But the technical picture continues to point to more weakness - a weekly uptrend from the end of 2004 has been broken and retested - while fundamental factors are beginning to look less friendly than they have been. The U.S. driving season is almost over, we're in the middle of hurricane season and it's been much quieter than the last couple of years, and moderating economic growth, particularly in the U.S., must surely start affecting demand. But perhaps the most convincing argument for prices moving lower is the way that recent fundamental developments have been shrugged off. Political tensions in Iraq, Nigeria and Iran have underpinned oil prices for some time, but recent fighting in the Middle East, allied with supply disruptions at BP's Prudhoe Bay oil field in Alaska, have had a very temporary bullish impact which have quickly run out of steam. As a result, 'super spike' predictions of $110 oil seem to have fallen off the radar and, while it's far too soon to bet against prices getting up there, there looks a better chance of prices going south, a move that would be exacerbated by the number of speculative longs having to reassess their positions. A good target on the weekly chart is a 50% retracement of the uptrend from the end of 2004 to the recent highs, which comes through at about $60. December $60 puts, which expire in 77 days, settled at 26 ticks yesterday. But remember the obvious caveat when establishing a bearish position in oil - many have been hurt doing so in recent times. |