Crude oil hits $140.39 record on NYMEX as Libya warns of output cut

This article belongs to the NYMEX crude oil price records story arc.

bloomberg.com :

Crude oil jumped above $140 to a record as Libya threatened to cut output, OPEC's president said prices may reach $170 by summer and the dollar weakened. Libya which produced 1.85 million barrels of crude oil per day last year (2.2% of global supply), may curb output because of a US law that allows terror victims to seize assets of foreign governments as compensation. Oil, gold and copper climbed as the dollar dropped because the Federal Reserve gave no signal of higher interest rates. Crude oil futures for August delivery on the New York Mercantile Exchange [NYMEX] touched $140.39 today [26 Jun 2008], surpassing the previous $139.89 record.

- This is starting to become a regular occurrence again - waking up over here in Singapore to a new crude oil record in overnight action on the NYMEX exchange. Taking a look at the various factors (or excuses as I like to term them) that the media has attributed to crude's rise, a peakoiler like msyelf cannot help but notice that the reason du jour has just switched from "speculators" to "Libya".

While the dollar factor is still mentioned and does constitute one component, you have to take a look at the charts to apreciate the divergences and ironies therein. USDX, the US dollar index, is currently floating around 72-odd, down from recent strength when it hit 74 resistance and turned back. But then, back in mid-March 2008, USDX was even lower, floating around 71 and close to 70 support, while crude oil was "only" $110 at that point. So, let's see : 71 USDX = $110 oil, while 72 USDX = $140 oil? Well, so much for the dollar factor.

Since we are talking support and resistance, a technical analysis of the crude oil charts is in order. We have been in a back-and-forth trading range throughout most of the June sessions, yo-yo-ing in a consolidation rage from just above $130 to just below $140. Fellow peakoiler simontay78 has likened it to a "shuttle run" - I think that's quite an apt description. This latest $140.39 record represents a breakout above this consolidation range and clears the decks for a run to the next resistance level which is $150. Beyond that, the subsequent resistance levels remain at $180, $200, $300 and way over $400. Support levels are at roughly $10 intervals at $130, $120, $110 and $100, and as a consumer it rather pains me to say this, but we might not really be able to count on the last 2 to come about.

Oil is in a bull market. We're going to $150 and beyond.

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