As Equities Rise, So Does Crude by tvnportal
As the US economy shows improvement and there are prospects of solving the European economic woes the demand for oil is expected to expand. Consequently Oil Prices Futures will be on the rise while world economic recovery proceeds. Oil prices futures and the S&P 500 Index are positively correlated – seen in 12 of the last 13 quarters. However oil prices futures gained more than 30% from early October while the S&P 500 only increased by 13%. The 12 month out forecasts for world crude oil and liquid fuel consumption total nearly 90 million barrels per day. As crude oil inventories in the US are currently at the lowest seasonal level in seven years higher Oil prices futures is definitely on the table for some time.
For those who trade oil prices futures using charts technicals for crude oil remain positive. After resistance at $90 in September which saw oil prices fall to bottom near $76 oil broke through late in October, which then turned the previous resistance level into a support support. As the US dollar gained strength from the euro mess in November and December the immediate impact on oil prices futures was obviously positive.
The recent strength in oil prices has produced the oil market in backwardation after three years of contango until late October – when the price of commodity contracts expiring in the near term was lower than the forward, future price of oil contracts. Backwardation is the reverse – being when today’s price is higher than the future purchase price.” Thus for the short-term it is quite bullish for oil and should suit most oil prices futures traders.