80 Proof

Source:

"Oil bulls have to be 80 anxious."

Oil traders may need a stiff drink after the wild end to Tuesday's trading session. Something strong like 80 proof or at the very least—proof that oil can close above 80. Oil prices failed to remain in octogenarian territory after a slow, relentless creeping rally that rejected a test of $81 and reverses all the way back into the 79 handle. Oil prices seem to creep higher all day in kind of a confused session as the market ticked one level of buy stops after another. Some said that oil was following the stock market. Other said that the stock market as following oil. Some said gold was following oil yet it was obvious there was no real consensus as to the nature of the strength and was probably the reason oil failed to be a Star 80.

That is not to say that there was not some bullish news. Some tried to say that because of power outages in post-earthquake Chile that refineries being shut would lead to a surge in imports. Products did seem to lead the rally. We also had a couple of US refinery glitches and hiccups that probably helped petroleum products along the way.

We also had reports from OPEC member UAE, which warned that demand for OPEC crude oil might fall by 100,000 bpd. The comments by UAE oil minister Mohamed Al-Hamli raised some concern that OPEC may take a harder look at their compliance to production quotas at their upcoming St. Patrick's Day meeting.

Oil bulls have to be 80 anxious. Oil has failed many time ~$80 a barrel and makes this a key resistance. You can only fail at this area so many times before the momentum shifts. Oil has been trying to trend higher; yet the daily ranges offer better opportunities than just a simple long or short position. If oil cannot close above $80 by the end of this week, more than likely it will start probing the lower end of the range near $70.

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