• 30 mins Shell Restarts Bonny Light Exports
  • 2 hours Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 8 hours Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 13 hours British Utility Companies Brace For Major Reforms
  • 17 hours Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 19 hours Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 20 hours Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 21 hours OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 22 hours London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 23 hours Rosneft Signs $400M Deal With Kurdistan
  • 1 day Kinder Morgan Warns About Trans Mountain Delays
  • 1 day India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 2 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 2 days Russia, Saudis Team Up To Boost Fracking Tech
  • 2 days Conflicting News Spurs Doubt On Aramco IPO
  • 2 days Exxon Starts Production At New Refinery In Texas
  • 2 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 3 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 3 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 3 days China To Take 5% Of Rosneft’s Output In New Deal
  • 3 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 3 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 3 days VW Fails To Secure Critical Commodity For EVs
  • 3 days Enbridge Pipeline Expansion Finally Approved
  • 3 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 3 days OPEC Oil Deal Compliance Falls To 86%
  • 4 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 4 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 4 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 4 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 4 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 4 days Aramco Says No Plans To Shelve IPO
  • 7 days Trump Passes Iran Nuclear Deal Back to Congress
  • 7 days Texas Shutters More Coal-Fired Plants
  • 7 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 7 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 7 days Chevron Quits Australian Deepwater Oil Exploration
  • 7 days Europe Braces For End Of Iran Nuclear Deal
  • 8 days Renewable Energy Startup Powering Native American Protest Camp
  • 8 days Husky Energy Set To Restart Pipeline

Breaking News:

Shell Restarts Bonny Light Exports

Alt Text

Clashes In Kurdistan Send Oil Prices Higher

Reports of skirmishes between Iraqi…

Alt Text

UK Oil And Gas Costs To Rise 100% If Brexit Fails

Brexit negotiators’ failure to secure…

Commodities Mansion

Commodities Mansion

For further reading about Crude Oil and Gold go to CommoditiesMansion.com.CommoditiesMansion.com is a part of the Finance Mansion network which operates thousands of global financial…

More Info

Crude Oil Analysis for the Week of February 27, 2012

Crude Oil Analysis for the Week of February 27, 2012

Crude oil surged last week to its highest level since May 2011. The close at $109.77 represents a $13.96 gain since bottoming at $95.81 on February 2.

Not only did the market breakout over a downtrending Gann angle from the $114.09 top at $108.72, but it also closed on the bullish side of a steep uptrending Gann angle from the $95.81 bottom. This angle comes in at $111.81 this week which means crude oil has to rally at least $2.05 to maintain its torrid upward pace.

If April crude oil begins to flatten or if upside momentum begins to slow, then traders should watch for the start of a near-term setback. The first sign of weakness will be a failure to hold above $108.72. Even if it does sell-off, it is likely to find support at $103.81.  If the market can continue to post strong gains then the charts indicate that the May top at $114.09 is likely to be tested by March 9.

Since the current market is moving vertically, speculators have to watch for daily or weekly closing price reversal tops. These types of tops are often volatile and often lead to wicked breaks of 50 percent or more of the last rally.

Fundamentally, demand continues to drop. This means that this entire rally is being driven by speculation. To be more specific, political posturing is to blame for higher crude oil prices and the jump in gasoline prices. Although there is only a threat of a military conflict in the Middle East, traders are acting as if there is a worldwide shortage of crude oil.

U.S. Treasury Secretary Timothy Geithner seems to believe that an improving economy and Iran’s “saber-rattling” were to blame for the surge in prices. He along with President Obama agreed that there was “no quick fix”. So it’s nice to know that the administration is on the same page. At the same time, U.S. consumers are suffering because of high gasoline prices. Taking money from consumers that would normally go toward food, shelter and clothing could disrupt the “so-called” recovery and create a slow down in the U.S. economy. And of course, the Fed will say there is no inflation. It looks as if the beat down of the American consumer is likely to continue.

High oil prices usually force the politicians to take action. In this case, it looks like Washington is preparing to pressure Saudi Arabia to increase production. At the same time it is also considering releasing oil from the U.S. strategic reserve.

Over the week-end, Saudi Arabia announced that it has increased its crude oil exports to cover any shortfall to the world supply from Iranian exports. This may be enough to clear up the uncertainty and to calm a few nerves. Ultimately, it all depends on how convinced speculators become that the supply-chain will not be interrupted.

With Saudi Arabia increasing output from 7.5 million barrels per day to just over 9 million barrels, bullish speculators may decide to pare positions. This could trigger a near-term correction, but not necessarily a change in trend. The key will be whether Saudi Arabia decides to make this a long-term move or keep it temporary.

Since this is an election year in the U.S., the President cannot afford any setbacks because of high gasoline prices. This is why traders should also watch for the U.S. to release oil from its strategic reserve. This is highly speculative, but with the White House at stake, the higher gasoline prices rise, the greater the chance of this occurring.

The weaker Dollar also played a role in last week’s rise in oil prices. Traders seeking more return bought higher risk assets while selling the Greenback. Since oil is priced in dollars, the cost per barrel became attractive to buyers. This increased demand but not as much as concerns over supply.

Increased production by Saudi Arabia and the release of oil from the strategic reserve are two potentially bearish factors that could drive prices lower this week. However, if Iran keeps up its tough stance or if it makes additional military threats then traders will not have to worry about the downside. The direction of the market this week will depend upon the strength of the speculative trading bloc.

Factors Affecting Crude Oil This Week:

Geopolitical Events:  Actions by Iran are causing the West to be reactive. This includes requesting Saudi Arabia to increase production as well as threatening to release oil from the U.S. strategic reserve. Both seem to be short-term solutions at this time and may not even cause speculative traders to blink.

European Sovereign Debt Crisis:  A relative calm is sweeping Europe at this time causing the Euro to rise and the Dollar to weaken. This may have helped increase demand for crude oil last week. Ultimately, high priced oil will hurt Europe so all the euphoria caused by Greece’s bailout is likely to be overshadowed by a slow-down in economic growth.

Supply and Demand:  Despite talk of a U.S. recovery, demand seems to be relatively low. Supply hasn’t been hurt by Iran’s actions, but the U.S. is threatening to release oil from its strategic reserve anyway. This should be enough to pressure prices over the short-run.

FXEmpire.com is the Forex flagship site of the FX Empire Network. The FX Empire Network provides readers with the most expert and most timely technical analyses, fundamental analyses and news-pieces; this in order to empower them to make for themselves the best possible financial decisions.
FXEmpire.com is updated daily with video based Technical Analyses, text based Fundamental Analyses and news-pieces. Our readers receive a review of the past week’s market activity coupled with an outlook for the upcoming week and regular market updates.




Back to homepage


Leave a comment
  • Mel Tisdale on February 27 2012 said:
    It is perhaps a reflection of the disconnect between the financial markets and the real world when the above describes factors that might improve the situation for the general public as "the downside" and "bearish" from the viewpoint of financial traders.

    Small wonder that they appear unable to understand how their obscene bonuses are anathema to the wider public who are working just as hard as they are, yet finding it difficult to make ends meet. It is also small wonder that it is becoming increasingly difficult to paper over the widening cracks in our society.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News