CRUDE OIL TRADER‘S ALERT !!

AS PER OUR CRUDE OIL BUY CALL INITIATED ON MAY 6TH 2011 @ 4405 MANAGED TO MAKE A HIGH OF 4674..BUT FAILED TO ACHIVE OUR TARGET 4720..

Lower Oil Prices ??

Like a roller coaster ride, 2011 saw oil prices climb gradually, only to fall dramatically this last week.

Here I offer my thoughts on some of the key contributing factors :

Let's begin with the relation between oil prices and the exchange rate. If the dollar depreciates by 1%, the dollar price of oil would have to go up 1% to keep the price paid outside the United States constant. This is a bit simplistic, one reason being that there is usually some third factor, such as a rise in incomes outside the United States, that is causing a change in both real oil prices and the exchange rate. Different factors affect the two series differently, so one might see a 1% depreciation correspond to an increase in dollar oil prices of more or less than 1%, or sometimes even an oil price decline. Between September 2009 and September 2010, a 1% depreciation of the exchange rate was associated on average with a 1.3% increase in the dollar price of commodities like oil or copper. The dollar rose about 3.5% against the euro between Wednesday and Friday, and the 4.5% decline in the price of copper could be pretty well explained by the exchange rate alone based on the recent correlations (3.5 x 1.3 = 4.5). But something more is involved in the 11% drop in the dollar price of crude oil observed those same two days.

Looking at the broader trend, the price of oil shot up 19% in February and March, during which the dollar depreciated against the euro by only 3%. The exchange rate can account for only a small part of recent movements in the price of oil.

We just cannot conclude that the BEAR RUN has began for crude oil..There might also be other factors involved like MANIPULATION & TRADER’S SENTIMENTS for crude to bleed.. So we advice trader’s to wait & watch as we re still expecting a bounce in crude prices..