Wednesday, December 27, 2006

WTI - Texas Tea - West Texas Intermediate Crude

Back at it's 50 day moving average...

This has been good news for us at the pump! 50 dma is an interesting area for crude. The last big break below the 50 dma sent WTI from $73 right down to $57. Does that mean crude is going to fall another $20? Wouldn't that be wonderful, but the answer to that is in the realm of "now way, Jose". Already today, the bears have lost their ambition with follow through crude selling of only 17-cents more to the downside following yesterday's slide. If the bears acquire further gumption for a further push lower the $57 area remains key. The chart clearly shows that you can draw a line just above $57 from today all the way back to March of 2005 as support/resistance. If ever there was a time for the bears to test this $57 support area again, the coming early January time frame (if this mild weather can stick around) ahead of another OPEC output cut and months before the summer driving season would be it. Whether they will is a completely different story, especially with major geopolitical tensions looming on the horizon. The complete shrugging off of the UN-Iran sanctions was somewhat surprising, but until crude breaks $60 I'm not convinced the market has thrown all geopolitical caution to the wind.

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