wmeubank@ocp.kcmo.com
IRA EPSTEIN & COMPANY
223 West Jackson, 7th Floor, Chicago, Illinois
(November 24, 1997) ENERGY COMPLEX: CRUDE OIL–HIGHLIGHTS OF THE ENERGY MARKETS–The UN team of arms inspectors including American members are back in Iraq for their duty. However, the stability of the situation is still doubtful.
OPEC is meeting on Wednesday, November 26th. It is expected to increase total OPEC oil production by 2.0 million barrels a day.
The world oil supply and production are estimated well above current demand and the inventory levels are expected to rise.
The API weekly report is due out Tuesday afternoon and is expected to be neutral.
The National Weather Service Corporation forecasts above normal temperatures over most of the central U.S. and northeast U.S. for next 6- to 10- days.
TECHNICALS–As was expected her last week, the energy markets sold off. In looking at the January crude oil chart, I expect the market to find a support at 1920 to 1950 for a near term, I also expect January heating oil and January unleaded gas to test 5400 to 5490 and 5500 to 5540 respectively.
I see resistance points in January crude oil between 2020 to 2050 near term, 5690 to 5750 in December heating oil, and from 5790 to 58500 in December unleaded gasoline.
TRADING IDEAS–Given the uncertain trading and political atmosphere, I suggest trading using different option combinations such as vertical call option spreads, ratio spreads or covered calls.
Kanu Rana
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