SELLING SPRING

Mexico's key export ports have reopened after being closed last week is another factor pressuring prices. Reports of a sharp jump in Chinese oil demand and imports may revivify some buyers but it probably won't be enough to muster a significant reversal of last week's action.

Doubtless, a  small ray of optimism that the the Federal Reserve's recent policy moves may help stabilize the housing market and start to temper a downward spiral in economic conditions will probably also provide insufficient impetus to get the bulls charging again.

Sentiment can only be  further undermined by OPEC's president predicting oil prices will range between $110 and $80 per barrel this year. Potential buyers may also be inhibited by comments from a Saudi Arabian oil official saying the kingdom is expanding its oil production and refining capacity to help keep pace with world demand.

The recent Commitments report for crude showed the combined length of speculative interests was reduced, but this reading is certainly over stated since the market fell nearly $10 from when the report was measured and that likely leaves the crude oil market in a more balanced state which obviates the intense overbought condition which had built up.

Only if a vastly more optimistic macro economic view can take hold, will the market be close to putting in a bottom. There is near-term support levels at $98.34 and below there at $95.50, but with global energy demand fears lingering and crude oil stocks likely to build during spring refinery maintenance, these points may prove very porous.             

M. Fitzpatrick