Monday, August 18, 2008

The Long And Short For Crude Oil

From a pure technical perspective, it appears the steep run up in crude prices has come to an end. A long list of factors have impacted crude oil prices since 2007:
  • increased global demand
  • geopolitical concerns
  • speculative investing (?)
The sharp uptrend in crude prices that began in the second quarter of this year broke through support in mid July when WTI crude declined to $131 per barrel. The next level of support would be a price just below $110.

(click on chart for larger image)


West Texas Crude Oil graph 2006-2008From a longer term look at crude prices, it appears the barrel price could be headed for a level below $100.

(click on chart for larger image)

West Texas Crude Oil graph 1998-2008
If crude does continue to pullback, this will free up consumer cash flow for purchases beyond filling their automobile gas tank. Spreading the consumer wallet to sectors outside of energy would have a positive impact on economic activity.

Data Source: Energy Information Administration


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