wmeubank@ocp.kcmo.com
THE HIGHTOWER REPORT
141 W. Jackson Blvd., Ste. 1520A, Chicago, Illinois
(November 25, 1997) ENERGY COMPLEX: The energy markets seem to be trending toward long-term key support. Unless the Iraqi situation blows up again the odds of an adequate supply for the North American winter continue to improve. Recently, increases in refinery operating rates suggest that any moderate cold front would be met with enough production to stave off any fear of tightness until the depth of the winter in late January or early February. Therefore, using strategies that expect prices to remain under wraps or continue lower for most of December, with any surprise price appreciation coming later in the year, might be appropriate. In heating oil, traders might sell December and buy February on a spread or buy call premium in February and sell January calls. As for crude oil, recent supply increases in the U.S., as measured by the API really casts a heavy layer of resistance over the market. Even OPEC seems to have added to the negative tilt toward prices as they plan to increase daily output to between 26 and 27 million barrels per day. Recent warmer than normal conditions in the U.S. suggest that upcoming API reports will show even further crude builds. When you throw into the current equation the threat of slowing worldwide off the Asian crisis the tilt toward the bear case is complete. The problem with getting short the energies at current price levels is that we are closing in on long-term chart support! Those with a tendency to trade long term might still look to buy heating oil around the weekly lows of the last two years.
For daily market updates of the Hightower Report of Comprehensive Commodity Research, call 900-225-2200, extension 5 for Energy Market Forecast. The cost per minute is $1.33.
Hosted by:
One Crossroads Place
610 West Maple Ave, Suite WWW
Independence, MO 64050
(816) 252-4080
sysop@kcmo.com