Monday June 22, 2009

NYMEX crude oil prices fall below $70 on gasoline market sentiment

reuters.com :

Crude oil prices fell below $70 per barrel on Monday [22 Jun 2009], extending the previous session's drop of more than 2%, as bearish sentiment over gasoline markets in the US continued to dominate investors' concerns. NYMEX crude oil futures for July 2009 delivery fell 2.5% on Friday, dragged down by the gasoline market as dealers bet on ample supply to meet demand from summer vacationers.

Analysts said ongoing attacks of oil facilities in Nigeria by militant groups may help lift oil prices in the short term. Nigeria's main militant group said it had attacked 3 oil installations belonging to Shell. In China, data showed oil demand rose 6% in May over a year ago, its fastest growth since August 2008, as oil firms produced at record rates on a recovering economy and buyers stocked up ahead of an official fuel price hike.

- Today, oil prices might have dropped below $70, but to put things into perspective, let's not forget that they were $10 per barrel back in 1999. Hardly cheap oil, by any stretch of the imagination. That particular era of cheap oil is over, especially with the peaking of light sweet crude oil back in May 2005.

As far as technical analysis goes, the 50/200-dma crossover that I talked about earlier is on track, and in fact the 50-dma line has just crossed over the 200-dma. Cycle indicators including stochastics are in overbought territory however - it's a bit tough to keep up a continuous streak of almost 2 months in the red-hot zone above 80. I'd be watching for a pullback to the $60 level to see if it acts as a support, having served as a highly-anticipated resistance level the month before. In the meantime, watch the oil price live as the action unfolds.

See also :

1. NYMEX crude oil recovers from $32.40 low after 2.2 mbpd OPEC production cut announced
2. NYMEX crude oil near $47 after surge as OPEC weighs production cut
3. Gold jumps over $950, crude oil rises above $50 as inflation concern spurs commodities
4. NYMEX crude oil prices rise above $53 on global stimulus, OPEC production cut

(2009-06-22 18:47:34 SGT) [Energy] Permalink

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