Crude Prices Hit a High for the Year

Keith Kohl

Written By Keith Kohl

Posted October 18, 2009

Welcome to the Energy and Capital Weekend Edition – our insights from the week in investing and links to our most-read Energy and Capital and sister publication articles.

Have the bulls finally broken through?

After stubbornly trading between $65 and $75 per barrel for the last four months, crude oil finally broke the high set in June.

As you can see below, it’s been a predictable ride the whole way. At times, we probably could’ve set our watch to it. Whenever crude approached $75 per barrel, a downward move to $65 per barrel was inevitable.

Crude oil Chart 10-16-09

Since Monday’s trading, oil prices rose nearly $6 per barrel. Even with a minimal inventory build of 400,000 barrels reported by the EIA, it wasn’t enough to sour the mood. The weekly report also showed that U.S. gasoline inventories dropped by 5.23 million barrels.

That wasn’t the only bullish news.

A Federal Reserve report was released, highlighting an increase in output at factories mines and utilities in September.

Is it a premature celebration?

Oil trader Phil Flynn isn’t convinced, "The Market is only focused on the bullish like stockpiles of distillates, including heating oil and diesel falling 1.08 million barrels to 170.1 million and not the fact that supply is 30 percent above the five-year average. Right now we have to respect the range. The market has finally broken out as the weak dollar and better economic data transcends oversupply on the perception that supplies will tighten more."

Whether or not we’ve shifted to a higher range for crude prices still remains to be seen. Oversupply will certainly keep a lid on things for a while, so I can only hope you are not expecting to see $85 per barrel this time around.

Enjoy your weekend,

keith kohl

Keith Kohl

Energy and Capital


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