Crude Oil futures prices slip, here’s why

Crude oil futures prices slipped this week as the latest
Department Of Energy (DOE) reports reflected a build in the unleaded inventories
for the first time in nine weeks. This surprised most analysts who were
expecting further drawdowns because of rising demand. However, demand was flat
and imports were way up so the refineries were off the hook this week and
continued to try to complete their seasonal turnarounds in time for the summer
driving season ahead.

The recent pullback for crude oil futures prices is exactly what I’ve been
calling for over the past couple of weeks. Primarily because this market rarely
breaks to new highs and holds for very long before heading lower. Crude oil
needs to gather steam once more before making another the push to the upside and
the recent inventory numbers seem to be the perfect excuse to do just that.

Don’t think for a second that I am discounting the latest and greatest from the
few rogue producers out there that seem to be hell bent on creating panic and
wild speculation in the market place. There is no question that the primary
motivator behind some of the conflicts we are seeing right now from Iran,
Venezuela and Nigeria etc…is greed. That doesn’t mean that these problems aren’t
real and that they can’t have a real effect on crude oil prices if some of these
situations were to escalate further. These countries are producers and that
alone puts them at odds with us as consumers. There is and old saying in the
world of salesmen that says “The best price for me, is the highest price
you’ll pay; the best price for you is the lowest price I’ll sell it for, let’s
meet somewhere in the middle
”. Right now I think they’re finding out what
their best price is and until demand is notably affected by rising crude oil
futures prices then they will surely go higher.

While crude oil futures prices have slipped somewhat over the past week it is
important to note that they are still in a very bullish uptrend and until we see
some fundamentals or technicals that point the other direction I remain a long
term bull with a short term pullback. We are currently holding a bear put ladder
spread in crude that achieves max profits between $67.00 and $66.00. Reference
the chart below.


Matt Odom is Energy Analyst/Principal Broker for Odom &
Frey Futures & Options, LLC. Odom & Frey is widely known as a leader in Option
Spread Strategies on the futures markets and provider of specialized in house
research and commentary. You can find Matt Odom daily throughout the investment
news arena including SmartMoney Futures TV in his "Crude Remarks" segment
where he brings traders into the fold on the latest trading action in the energy
complex. He is also co-author for O&F News & Views, a weekly trading newsletter
read by over 10,000 market enthusiasts each week. You can find this commentary
at email: phone: