Ethanol Blog

Crude Oil Rallies Based on Short Covering

Rick Kment
By  Rick Kment , DTN Analyst

Even though crude oil and energy markets in general posted a significant rally Friday afternoon, there still remains questions about just how much longer-term support is in the market.

The $3.71-per-barrel rally in March contracts Friday afternoon just before trade closed helped to push the weekly chart back to a positive price shift.

But prices on the monthly chart are still lower, falling $5.46 per barrel through January. There is still a lot of concern about the previous inability to curb or even desire to limit crude oil production at the lower prices, as well as lackluster demand due to struggling global economies.

This late-week and late-month price shift could essentially add even more volatility into the market if buyer support is not maintained early next week. It is expected that if prices once again move below $45 per barrel early next week, then follow through pressure is likely to continue over the near future.

Rick Kment can be reached at rick.kment@dtn.com

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Rick Kment