This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Oil Prices Seesaw Before Fed

NEW YORK ( TheStreet) -- Crude oil seesawed on Tuesday and settled in line with the previous day's trade, as the Federal Open Market Committee meeting and Fed chairman Ben Bernanke's press conference scheduled for Wednesday weighed on the recent upside in the oil markets.

A key technical threshold was also weighing on the oil trade, as crude oil had topped $113 during Monday trading. The $113 level has proved to be the recent resistance point for the oil trade.

Nymex crude oil futures reached as high as $112.64 during Tuesday's market action, but settled in the afternoon at $112.21, higher than the previous settle of $112.11. Brent crude was recently trading at $124.22, up 0.4%.

"Pushing through $113 takes more buying support, and we're in a range where people are happy to take profits," said commodities analyst Matt Smith of Summit Energy. "Despite everything going on in the Middle East, it's a bit of a stalemate."

Phil Flynn, market strategist at PFG Best, said that a key resistance level for commodities, more generally than specific to oil prices, has been tested this week, with oil hitting $113 on Monday and silver testing $50, and that the Fed meeting has heightened the focus on inflation and the run-up in commodities with a weak dollar.

"I still think we exceed these levels; I think we just got there too soon, and that's one reason why people may have taken off some bets," Flynn said. "What happens with the Fed is a major event for commodities. I can't think of a more important Fed meeting in recent memory," the market strategist added.

Gold and silver also headed lower on Tuesday morning.

The market is looking for any recognition from the Fed of a link between its loose monetary policy and commodities inflation, on the one hand -- though no one believes "QE2" will end before it expires in June -- as well as any signal that a QE3 could be on the horizon, and Bernanke sticking to his argument that inflation is not a major concern and can be dealt with expeditiously by the Fed when, and if, needed. QE, or quantitative easing, is the process by which the Fed purchases long-term Treasuries with the objective of maintaining low interest rates so that the economic recovery may continue.

The seesaw action in the oil trade could be part of a late-to-the-game market syndrome as well, said commodities trading adviser John McClane of Mobius Asset Management. "This has been the spot where oil pauses a little, and all the weaklings are run out, the profit-takers who came in late to the game and at the first visit from the boogeyman are heading out," McClane said. "It's going to be harder to push past $113 before the Fed meeting," the portfolio manager said.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
BP $42.50 0.00%
CVI $40.11 0.00%
CVX $104.89 0.00%
VLO $60.99 0.00%
WNR $45.82 0.00%

Markets

DOW 18,232.02 -53.72 -0.29%
S&P 500 2,126.06 -4.76 -0.22%
NASDAQ 5,089.3620 -1.4320 -0.03%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs