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Mideast Turmoil Keeps Oil Traders Hopping

Henry Marchell

Egypt is imploding. The demonstrations and riots are building. This is in response to the aggressive power grab by President Morisi, who has stripped the judiciary of their powers. The Muslim Brotherhood has taken to the streets to support the move. This may sound like the populace is supporting the move. However, the Muslim Brotherhood is from whence Morisi has allegiance. This is a violent and strict sect of Islam. These are the same people responsible for blowing up Catholic churches and murdering the attendees. The interesting view is that the market is focusing on the economic and not the geopolitical. It was noted that share prices in Egypt were off 9.%. Moving onto Israel, the tentative truce with Hamas is holding for now and that too may be a reason for softer pricing this morning. Iraq’s oil minister did raise the notion that perhaps oil should be use3d as a weapon against Israel.

Hope springs eternal for another bailout of Greece. The latest trial balloon was offered by the very left of center French finance minister. He wants Greece to be allowed to buy back its debt. This would set the market for the securities and everyone would have the same mark down. The Euro lost 50 pips on the news.

CRUDE: Hi: 898.29; Low: 87.64

Jan is focused on the economics of supply versus the demand that is in stasis for now. Nevertheless Jan has a potential to move higher with a break of 88.30. That will break above a bull pennant formation on the hourly chart. However, we have already given the retracement a bit more of slippage than usually due to the overnight trading. There will be the minor downside pivot at 87.60. The key downside pivot to the intraday chart is 86.10. We look at this as a two way market.

BRENT: Hi: 111.48; Low: 110.75

The key to this market moving higher in the immediate term is its ability to hold 110.70. The minor upside pivot that will show a resurgence of strength is a busting of 111.65. The minor downside pivot is 110.50. The key downside pivot to the intraday pattern is 110.00. The key downside pivot to the short-term pattern is a daily settle below 109.00. We view this as a two way market for Monday. This is a “buy the dip, sell the rip” market taking its clues from the U.S. dollar and headlines.

RBOB: Hi: 2.7525; Low: 2.7356

The hourly chart for Dec is bounded by 2.76 on the upside and 2.72 on the downside. The bulls need to push Dec through 2.76 to give it a look of a potentially sub-dividing move higher. However, breaking below 2.72 renders the recent high of 2.7725 completing the wave to the upside from 2.5525. This has been our main model since seeing that high manifest. Breaking 2.76 will throw the towel in on that outlook. We are a seller of the rally at 2.76 with a stop above 2.7650. We will reverse the outlook with a break of 2.7725.

DIST: Hi: 3.0808; Low: 3.0650

Cooler air to replace above normal temperatures on the East Coast and a Black Friday extravaganza at the malls and cyber shopping will also underpin the motor fuel. But this formation is built on 3.0450 staying inviolate. Dec will need to punch through 3.0930 to register a pick up in momentum. There will be a quick poke at the 55 DMA at 3.1020. A daily settle above this level will be bullish. An intraday break though will be important. In this event the objective will become 3.13.

NAT: Hi: 3.868; Low: 3.819

There is no doubt that Friday’s move to 3.93 completed a leg to the upside. What was of question was whether Dec would tag on another leg. For that to be suggested requires Dec to hold 2.82, the minor downside pivot. Dec has also broken the sharp uptrend on the daily continuation chart. That rests at 3.89. This will be the minor upside pivot. the key downside pivot is 3.66. With an intraday break of 3.82 will come a quick dump to 3.74 to 3.72. Dec will signal a rush to 3.99 to 4.02 with a break of 3.94. We are a seller of the rally.

GASOIL: Hi:956.00; Low: 953.00

December registered a new high for this pattern on Friday. Although it has nudged above the 100 DMA on the continuation chart, it has not settled above that mark. The minor upside pivot that will signal a new bull thrust is a break of 957.00. The minor downside pivot is 947.00, but the key downside pivot to the short-term view is 943.00.


Chicago Fed National Activity Index
Released On 11/26/2012 8:30:00 AM For Oct, 2012
Prior Consensus Consensus Range
Level 0.00 0.18 0.10 to 0.25