Crude Oil Futures Update

WTI Crude Oil failed to close above major resistance yesterday even after the International Energy Agency raised its forecast for global consumption in 2007.

Global demand is anticipated to rise by 1.8% to 86 mill barrels a day, according to the IEA.

This is an increase of 270k per day against what it predicted just over a month ago, based on predominantly of higher expected consumption in China. In addition tom this the IEA "revised down its 2007 estimate for oil production from non-OPEC countries by 1.8 million barrels.

The revised demand forecast and a lowering of expected non-OPEC supplies has certainly led to a tighter demand-supply balance.

The weekly inventory data is the main event for trading today. Crude & Gasoline Inventories are not expected to provide any surprises, although keep an eye on distillates, where a draw of 4000K is expected.
This is a "largish" number, so the market will be especially reading any deviations on this number from the consensus to be the main driver to todays trade.

Although there has been much bullish news to the market, it appeared quite apparent that that Crude prices have not been able to claw itself past daily resistance.
The past three days have the market showing lower highs, a sign of slowing momentum in what has been a range bound market.
The 50 day moving average has also provided a good resistance indicator and we very much favor technical trading against this.

We expect this weakness to continue, especially if the weekly inventory data is published in line with expectations.