Crude oil prices saw some strength last week but ultimately fell by close of Friday. That caused a ~3 dollar contraction in the upper Confidence Interval (CI), from 85.75 last week to 82.88 today, but the lower bound dipped just twenty cents from 69.99 to 69.79. Therefore even if the dollar rallies we would expect significant resistance around the $70 mark, fundamentally investors have put too much money on the table to give up the $70 barrier without a fight. In the longer term, the 2010 average CI remains basically stationary at (63.43, 103.38) from (62.94, 105.02) last week.
Crude oil prices failed to react to morning news of Iran’s nuclear ambitions but spiked in the afternoon as the same detained a boatload of British sailors.
As far as today goes, bids through yesterday's knee-jerk high at 78.00 alert to follow through momentum towards our 78.82 inflection-point. Here at The Schork Report, we will look for strength above here towards our 80.35 intra-day.
Natural Gas Prices… According to the EIA’s latest monthly updates (914-survey and Natural Gas Monthly or NGM), gross gas production in the lower 48 U.S. states decreased by 2.2% in September to an eleven month low of 61.83 Bcf/d. The EIA noted that Louisiana reported the only increase in production as drilling in the Haynesville shale continued, but all other areas reported decreases because of a combination of natural gas plant maintenance, repairs, and shut-ins due to low gas prices. Meantime, marketed production in the lower 48 dropped by 2.2% to a year-to-date low of 58.19 Bcf/d.
Volatility in the NYMEX Henry Hub pit has spiked over the last handful of sessions. Last Tuesday 10-day historical vol was 42.84%; last night it settled at 68.21%. Therefore, over the last four sessions dollar risk has jumped from around 12 cents to 20 cents or from below $1,200 a contract to over $2,000.
As far as today goes, offers through nearby trendline support at 4.740 alert to follow through momentum towards our 4.675 inflection-point. Here at The Schork Reportwe will look for weakness below here towards our 4.502 intra-day.
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Stephen Schork is the Editor of, "The Schork Report"and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.