NYMEX Crude (May) CL1K
Peaking at US$108.25 on Monday, May crude hit 100 on Friday, and is expected to be rather volatile in coming hours of trade.
• There are so many factors in play this week that we do not profess to being able to predict with any certainty the direction of crude.
• We think the Japan tragedy will be net positive for actual oil demand, given they imported an additional 500,000bpd after the Kobe earthquake. With some nuclear facilities likely to be offline for a protected period of time, the Japanese will turn to fossil fuels to generate power, which will be positive for oil, natural gas and indeed coal.
• If CL1K breaks below 100 quickly, then we see 97.2 as the next key level. If that fails, well things could get ugly.
• To turn things bullish a move north of 104 is needed, and even then 106 or so is a significant near term barrier now.