Analysis Crude Oil - 29 Feb 1008

Crude Oil (Mar 12) MT: aim @ 114.
Update on supports and resistances. ( 29/02/2012 10:08 )

Pivot: 89.50

Our Preference: Long above 89.5 with targets @ 114 & 122.5 in extension.

Alternative Scenario: Below 89.5 eye a drop towards 77.

Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

Trend: ST Ltd upside; MT Bullish, we have been bullish since 26 OCT 2011 (90.5).

Key levels Comment

126.5 Fib projection

122.5 Fib retracement (78.6%)

114 Swing high

105.83 Last

89.5 Pivot point

77 Horizontal support

68 Horizontal support



TIPS:


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NEWS:

Crude oil futures regained strength on Wednesday, bouncing off a four-day low as investors await the outcome of the second long-term refinancing operation from the European Central Bank later in the day, while continuing to monitor tensions between Iran and the West.

On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD107.11 a barrel during European morning trade, gaining 0.53%.

It earlier rose by as much as 0.6% to trade at a session high USD107.20 a barrel. Prices dropped nearly 2% on Tuesday, the biggest daily decline in almost five weeks, after U.S. durable goods orders plunged last month.

Prices rebounded as investors looked ahead to the launch of the ECB’s second three-year long-term refinancing operation, after a similar liquidity injection in December eased pressure on peripheral euro zone bond markets.

Market participants expect the liquidity operation to total nearly EUR500 billion, after banks borrowed EUR489 in the December operation.

Meanwhile, oil traders continued to monitor tensions between Iran and the West and a potential disruption to oil supplies from the region.

Growing tensions between Iran and Israel also remain in focus. There are fears that an escalation of hostilities between Israel and Iran could set off a conflict across the region and send oil prices skyrocketing.

Israel and the U.S. have previously stated that all options are on the table in ensuring the Islamic Republic does not acquire atomic weapons.

Iran produces about 3.5 million barrels of oil a day, making it the second largest oil producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia.

Market participants were also looking forward to the U.S. Energy Information Administration’s closely-watched weekly report on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.

The report was expected to show that U.S. crude oil stockpiles rose by 1.2 million barrels last week, while gasoline supplies were forecast to increase by 0.2 million barrels.

After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories rose by 0.5 million barrels last week, below forecasts for a 1.1 million barrel buildup.

Crude oil prices traded on the NYMEX have gained nearly 8.5% in February and are up almost 10% since the start of 2012.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery rose 0.9% to trade at USD122.64 a barrel, with the spread between the Brent and crude contracts standing at USD15.53.

Brent futures have rallied nearly 10% since the beginning of February, the biggest monthly gain since February of last year, as geopolitical and production issues in Iran, the North Sea, South Sudan, Syria and Yemen tightened supplies.