Wednesday, June 8, 2011

Thursday Oil Market Analysis

Last week, I wrote the following about the oil market:
The oil market is still trying to figure out a direction. On the upside, we are moving into the summer driving season, which is typically a period of rising oil prices. However, with retail gas prices still near $4/gallon and the economy slowing, traders are also aware that gas can't go much higher without killing US demand. At the same time, developing markets are providing a demand floor; as their respective middle classes have grown, so has their respective oil demand. As such, there is little reason to see a significant price decline -- hence, the reason I thing 96 will provide support going froward.
I have provided similar analysis for the last few weeks. Nothing has occurred on the chart to change my analysis this week. Consider this chart:

Prices are still bounded by the two boundaries of roughly 97/98 and 104. The analysis above still provides the overall macro analysis.

Same analysis, different week.