NOT SO DURABLE

Climbing as high as 102.08 overnight is quite startling in view of the fact that another considerable addition to crude stocks is expected today.

Prices have since posted the day's lows so far, reacting to a durable goods number that provide another piece to an economic puzzle that is coming together to display a recessionary look.

New orders for big ticket purchases fell by 5.3% in January, the biggest drop in five months and much worse than expected. Still,  there seems to be a variety of factors providing price support right now, albeit temporary.

The whole energy complex seems to be getting a lift from residual heating demand, as some weather forecasts call for the Midwest to stay cold through March.

The sharp break in the dollar appears to be sparking another round of broad based speculative commodity fund buying, including energies, as a hedge against ensuing inflation.

Another concern is that OPEC will unofficially trim back supplies, while leaving official quotas unchanged at the March 5th meeting. The US supply/demand situation for crude oil is clearly deteriorating with crude oil stocks in a rebuilding cycle, refinery operations low and spring maintenance just ahead.

Apparently, participants expect OPEC supplies to remain tight enough to offset the prospects of sagging US demand.

M. Fitzpatrick