Crude set for firmer opening
The May NYMEX crude and April RBOB gasoline and heating oil contracts are all expected to open above Monday's settles. The higher open is attributed to speculators once again selling the dollar against oil and other commodities as a hedge against inflation and a weak U.S. economy.
In addition, recent fighting in Basra, Iraq where much Iraqi crude is produced has raised fears that crude supplies might be disrupted by non-government militant group's intent on controlling the region. Recent reports out of the region suggest there are at least three Shiite groups engaged in combat with Iraqi military forces; some of whom have, in the past, blown up oil pipelines and other oil facilities. The very fact that Iraqi forces are engaging militants should be a positive sign that the government is finally addressing the issue of unity under an elected government. However, it remains to be seen how the military will perform, and naturally how oil infrastructure will be protected.
Our early morning analysis suggests that prices will likely stay well into positive territory prior to today's release of EIA inventory estimates for the week ending March 21. Most analysts, including ourselves, have predicted a solid build in crude while calling for sharp declines in gasoline and heating oil. If there are no major surprises we believe prices will come under some pressure. However, we again urge caution as the speculators selling the dollar are out for new records in oil.
In addition, recent fighting in Basra, Iraq where much Iraqi crude is produced has raised fears that crude supplies might be disrupted by non-government militant group's intent on controlling the region. Recent reports out of the region suggest there are at least three Shiite groups engaged in combat with Iraqi military forces; some of whom have, in the past, blown up oil pipelines and other oil facilities. The very fact that Iraqi forces are engaging militants should be a positive sign that the government is finally addressing the issue of unity under an elected government. However, it remains to be seen how the military will perform, and naturally how oil infrastructure will be protected.
Our early morning analysis suggests that prices will likely stay well into positive territory prior to today's release of EIA inventory estimates for the week ending March 21. Most analysts, including ourselves, have predicted a solid build in crude while calling for sharp declines in gasoline and heating oil. If there are no major surprises we believe prices will come under some pressure. However, we again urge caution as the speculators selling the dollar are out for new records in oil.
