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(May 9, 1997) ENERGIES: The petro market was sluggish and uneventful. The crude touched $19.30 closing at $20.03 up 23 on the week. Prices are stable in May. The selling from producers and domestic specs has put the bear in control. The commercials are out in the market and the intermediate trend now is down. This means that a slight rise was expected. Cover short from the $21.00 level.
We achieved our bear objective this week. The last decline took the market to $19.44. The probability of success here was 30.0:1. The oil complex is dumping up now as May is with us as we had forecast and has shown better relative strength as the spring comes. The API statistics have shown a drop of .7-million barrels in crude stock, which is slightly positive. The Commitment of Traders is very bearish at 27% bulls. We saw a plunge to low levels this week as expected and not too much after that. We want to stay in the May crude contract. We hope you sold the unleaded or natural gas which died as expected. Stay tuned. The last report showed a 5-million barrel drawdown in stocks. These markets are coming closer to buy zones. Use the June contracts from now on. The large down move has more to go. Commercials and locals are staying short and crushing the wrong longs. This bodes for somewhat lower prices. The heating oil is moving sideways as it has leveled off a bit this week by 100 points this week on low volume. The oil market is twitchy about any Middle East disruptions or conflict. Fundamentals are negative here. We see that the supply is not the talk of the floor any more.
The situation has quieted in the Middle East for now. Keep the trend going lower. The levels to watch are 20.56 up and 19.20 down. We see these determining the trend move.
June Crude Oil--Position: Close 20.34 up 43 cents.
David E. Triester
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