THE FIX IS IN

Crude prices pulled back over night on news that oil flows through Iraq's southern export pipeline had been restored. Sentiment has shifted again this week in favor of the bulls with tightening stocks and a weak dollar, plus geopolitical events have come back into play.

Under these conditions, breaks in this market will likely be short lived, as fresh buying interest will probably be generated on dips. Fighting between the Iraq army and rebel forces has escalated this week, but the surge off yesterday's damaged pipeline news is beginning to fade, since the pipeline has been repaired and no other incident has been reported overnight.

This week's bullish inventory report was another major catalyst flipping sentiment back to the bull camp. A report that OPEC exports out to April 12th are expected to fall a bit may have added to supply concerns, as well. Sagging demand fears appear to be shelved for the moment.

The demand issue will at some point must necessarily be a concern again. While there has not been overwhelmingly conclusive evidence that the US will go into recession, the drumbeat of negative statistics seems to grow louder and louder.

Prices should settle back  a bit this session with a stronger dollar and news that Nigerian oil exports are expected to rise 14% in May compared to April. Although the threat of a strike next week might erase that fairly quickly.

Unless supply anxieties really calm down, recessionary evidence becomes indisputable or the technical environment is altered by a settlement under $100 bouts of selling should be relatively contained.

J. Kilduff