Schaefer's yesterday:
Up until today, oil had taken a bit of a beating during the past several sessions, and with good reason. Earlier this week, OPEC trimmed its 2005 demand-growth outlook by 150,000 barrels per day due to lower consumption in the first half of the year in some of the major consuming countries, such as China. Furthermore, hurricane season is proving to be a little more benign than some had feared, with rigs in the Gulf of Mexico quickly bouncing back from Hurricane Dennis and Emily turning to miss the major rigs altogether. (Of course, we're still early in the season and this bout of luck could quickly change.) Let's not forget that the price of oil has soared by about a third since the start of 2005. So a bit of a pullback was to be expected.
When I last visited oil, I laid out both the bullish and bearish cases in my article, The Battle for Black Gold. I thought I'd check back on some of the important levels I pointed out on May 20 and review a few interesting developments.
One key technical formation that drew my eye in May was the Energy Select SPDR Fund's (XLE: sentiment, chart, options) pullback to support at its 10-month and 160-day moving averages. Since that observation, this exchange-traded fund (ETF) has nicely rebounded off these trendlines and resumed its uptrend. Furthermore, the shares are now reaching for new-high territory after bouncing off support in the 45 area, which marked a region of staunch resistance in March. |
