Crude prices finally starting slipping after they recorded another all time record high of $126.40 per barrel due to profit taking. Investors locked in on profits as the earthquake in China that killed around 10,000 while damaging power plants and transmission lines would temporarily dampen demand as it already for the first time in 18 months lowered crude imports.
It was expected in the markets that a correction was soon going to occur after the strong bullish wave we were witnessing in the crude markets. Yesterday the contract shed $1.73 as it closed at $124.23 while recording a low of $123.70 per barrel.
Today, crude prices continue its slide as investors started realizing that prices have climbed too fast and the market is overbought. In addition to investors fleeing the market as they figured prices will start dipping was that inventories in the US were predicted to have increased.
It was believed that investors absorbed the tension in Nigeria too seriously as they entered the crude markets looking for potential in soaring prices. The markets today opened at $123.76 while recording a high of $123.94 per barrel and a low of $123.10 per barrel.
As we have always known that investors enter the crude market as a hedge against inflation and the falling dollar, but the past couple of day's prices have been unstoppable to supply and demand factors which were controlling the market since the US dollar was gaining. Friday, President George Bush will meet with Saudi Arabia to discuss with them how high oil prices have been affecting economies as it adds to inflationary pressures. In the upcoming days, prices will start to ease as China was hit by an earthquake and while people look forward to Friday.
Still to come thought today are hints from the US economy, especially on interest rates. Fed's Bernanke is expected to speak on liquidity in a financial conference while retail sales are to lay ground for spending patterns upon the start of the second quarter in the US. The dollar strength or weakness will not be the major mover as much as crude consumption expectations as lately oil has had its traders that supported the strong bullish trend despite the strengthening greenback, so for that keep a watch out today for the US fundamentals…
| Support | 122.87 | 122.50 | 122.10 | 121.40 | 120.50 |
| Resistance | 123.86 | 124.55 | 125.25 | 125.90 | 126.35 |
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