July crude oil prices traded higher during the initial morning hours today, buoyed by weakness in the US Dollar, a generally positive tone in other physical commodity markets and the potential for renewed Middle East tensions. Those early factors seemed to take crude's attention away from a sluggish demand outlook after the recent flow of disappointing US economic data. With Middle East tensions boiling on the surface again, there is a good chance that the market does not want to go into a 3-day holiday weekend with too much short-side exposure. NATO goes for fourth day of air strikes in Tripoli, with reports of a hit on Gaddafi's compound which contributed to some level of support for crude oil prices. Meanwhile, cash traders indicate that July crude oil in the $100 range provides a good level for hedging. There also seems to be a level of physical demand from refiners, as they gear up for the peak summer driving season ahead. July crude oil appears to be in the process of overcoming Thursday's negative reversal action, but so far remains inside of a tight range. The short term price trend favors the bull camp, with swing support below at $98.20. It is possible that July crude oil retraces a bit more of this week's rally, with a further short term slide to $99.00.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.