Crude heading lower next week - Analyst

Houston, TX - The NYMEX May crude and heating oil contract prices both finished in negative territory; never able to make an honest attempt at going positive. However, gasoline, after opening sharply lower reversed itself and moved into positive territory where it stayed through the close.

We believe that the lower crude and heating oil and higher gasoline price is due to a massive reversal of crude/gasoline and heat/gasoline spreads. This is especially true of the gasoline/heating oil spread that late last week almost reached a 56 cents per gallon premium for heating oil. Today that spread ended the day at just slightly above a 36 cents premium.

As we look forward to early next week we expect some short-covering in crude and heating oil that could possibly lift prices by at least $1.00 to $2.00 on a per barrel basis.

Our earlier analysis suggested that if crude did not at least rally to $1.00 above yesterday's settle, we may have entered our long anticipated pullback. Unless some real supply disruption occurs over the next few trading days (not the standard hype of worries that demand is outpacing supply) we believe we are headed to $95.00 sometime next week as traders seem more inclined to sell rallies rather than buy retreats.