Friday, 1 Apr 2011

Crude Oil Trading at High Before Payrolls

Spot crude oil is holding near its yearly high as a rebound in risk taking has commodities moving higher.

Following the geopolitical events in Africa and the natural disaster in Japan, commodity prices have rebounded to their pre-event levels. Crude oil is trading up at $107 after falling to a low of $99 following the Japanese earthquake.

Middle East tensions have helped to keep crude oil prices high. Despite intervention by NATO forces in Libya, there appears to be no end in sight for the conflict.

One reason for the high price of crude oil may be the availability of cheap funding. Following the implementation of QE II by the Federal Reserve, liquidity is now very accessible and money has moved into commodity futures and ETFs. Today's non-farm payrolls at 13:30 will most likely have an impact on the Fed's monetary policy decisions when it meets later this month. Better than expected results from the jobs report may support further long position in crude oil.

Should the Fed stay with ultra-loose monetary policy and the fighting in Libya continue, this may also drive gains for crude oil.

$110.25 and 121.60 stand out as potential targets for crude oil.