25/2 CRUDE STUCK IN A TIGHT TRADING RANGE
WTI Crude continues to be stuck in a relatively tight trading range between $36.80 and $44.00. The renewed sell off in stock markets recently has not lead to any new lows being made and the bounce yesterday in S&P led to a 4% rally indication some resilience at current prices.
Behind the scenes the near month spreads has widened a little over the last couple of days as some investors have rolled their long into May or June in order to avoid the roll pressure from the US Oil Fund (USO:arcx) which currently holds 95,000 lots of April which needs to be rolled between the 6th and 11th March. Some are already now speculating in the spread widening around that time.
It is expected that OPEC will cut again in March to eliminate the floating storage of up towards 80 mio barrels which then in turn should begin to reduce onshore crude stock. Current expectations for global demand is a reduction of 1.5 mio barrels per day which compared to already agreed OPEC cuts of 4.2 mbd. Based on those assumption higher prices in H2 of 2009 is a possibility.
The above is most likely what currently hold Crude prices in a tight range and which also has lead to a certain dislocation from negative stock- and currency markets movements recently.
Support: 3780 3680
Resistance: 4020 4150 4395