Muslims Expand Protests Outside the Middle East

Published on September 17, 2012 by in Energy

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Muslims the world over have been protesting the anti-Islamic slur that was posted on You Tube a week or so ago.  Although this was not sanctioned by the U.S. government, the Islamic protestors do not think anything is done without a government’s approval. This has unleashed a spate of demonstrations in France and England. More Marines have been sent to both Sudan and Tunisia.  Moreover, there have been thirty countries that participated in a Persian Gulf exercise on the detection and clearing of mines. This plus the inflation trade of the Fed will keep the energies supported at lower prices.

However, we are very concerned with the governments’ appetite to release oil reserves. The pattern fits this type of scenario. In fact, our model suggests that the high of this leg will be established during the early part of this week. We can see that the price action following such a move will press Nov to test the 94.75 area if released. Otherwise, it will be steady to higher prices. However, prices are steady this morning with the dollar slightly higher and mild profit taking has set in. Monday’s have been a traditionally down day for equities of late. We wait to see if today follows suit. We would use any weakness in any risk asset market to buy the instrument with the exceptions of bonds.

CRUDE: Hi: 99.28; Low: 98.56

Oct has managed a flat correction on the hourly chart. This is also known as a double bottom. It is at the 98.50 level. Although this level may hold, if it gives way 98.00 will prove supportive. the minor downside pivot to the 98.00 support is 97.80. It is with a simple break of 98.50 that that mark will be tested. We look for this dip to hold and give way to a test of 100.40. The upside pivot to this resistance is 100.70. Breaking this level with a daily settle will eye key resistance and a probable top at 102.80. We are a buyer of the dip and a seller of the strong rally. Any rumor or news about oil release will be met with a quick and sharp sell off.

RBOB: Hi: 3.0279; Low: 2.9970

Oct has nudged below our initial support level at 3.0050. It has broken the neckline of a minor head and shoulders top on the hourly chart. However, the downside pivot to bearish momentum is a break of 2.99. That will yield a drop to 2.96. Although we feel this will be the weaker component of the petro complex, it may recharge the 3.05 trend line with a strong move higher of WTI. Nevertheless if one is bearish on the oil market this will be the weaker market to sell on strength. Oct will have minor resistance at 3.0250. The minor upside pivot is 3.03. The key upside pivot is 3.04. We will be a seller of the strong rally.

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