Tidewater Petroleum Cooperative Inc

9242 W. Windsor Boulevard, P.O. Box 206

Windsor Virginia 23487

757-242-4188

 

 

Petroleum Market Update

 

April 17, 2008

 

30-Day Market Outlook:

 

Bearish (falling prices)                                                                                             Bullish (rising prices)    

 

The strength in prices looks like it will stay for a little while.  While there is certainly room for prices to move lower, it looks like we are in for higher prices first.

 

Market Comments:

 

Crude oil and other energy products are setting records daily, similar to the pattern we saw in early January and mid-March.  The good news is that prices made a nice pullback after each string of record setting high prices in January and March.  It will be nice to see the next pullback arrive sooner than later. 

 

As of April 17, 2008, an industry report said that technical numbers indicates crude oil prices would move towards $124 in the near-term.  Additionally, legendary oilman T. Boone Pickens was quoted as saying he believes crude oil could top $125 in the near-term.  There is a growing sentiment that crude will make a move to the $120’s.  Unfortunately these market predictions tend to become self-fulfilling prophecies.  Traders hear so many people saying prices will move to $125 they don’t have any problem buying crude at $118, $120, $122, etc.

 

The big question as to how high and how long oil prices will climb hinges largely on what happens in the US economy.  If the economy strengthens and resumes growth, that will put pressure on inventories and keep prices elevates.  However, if high fuel costs cause the economy to slow further, prices should ease on falling demand.  Emerging economies like China and India are showing strong growth in oil demand, so their growth will offset any small decrease in US demand.

 

Another factor is the value of the US dollar.  Investment firms keep moving large amounts of money into crude and other commodities as a hedge against the falling dollar.  With lots of buyers, price move up.  The Fed will likely lower interest rates again in an effort to spur economic activity, lower interest rates means the dollar will continue to struggle.