Oil Prices Surge on Eurozone Confidence

PFGBest senior energy analyst Phil Flynn says those that want to follow the intraday trend would be a buyer of the WTI-Brent spread below $26. This would be an aggressive bid on the spread.

Flynn says that those looking for the spread to top out amid the bullish momentum should aggressively short the spread at $27. "If the spread went to $27, you would see some profit taking."

Flynn adds that while many have dismissed WTI as the global benchmark for crude oil prices, it will be useful to look at both WTI and Brent in the coming years.

"The death of the WTI as a global benchmark has been greatly exaggerated ... dismissing the WTI is premature," said Flynn. "All the people jumping on the Brent bandwagon as a global leader may run back to the WTI a year or two down road the road. Some of their problems [i.e. pipeline infrastructure] are more easily fixed than problems in the North Sea."

Natural gas prices were up 17.2 cents to $3.703 per million British thermal units -- despite the previous day's bigger-than-expect storage injection numbers -- as the commodity followed crude oil prices higher.

"Colder weather forecasts and a surging crude oil market ... all helping to press natty higher too, despite a storage estimate for next week of +110 to +120 billion cubic feet ," says WeatherBELL Analytics' energy analyst Alan Lammey.

Lammey says the major area of support for natural gas has been between $3.35 and $3.45.

"Now that we've arrived at this level, there are a lot of hedge funds and large speculators that are covering shorts and no real wave of new sellers at this level, so it is hard to move it lower at current," he added. "The market can still try again at testing the $3.40 into next week, particularly given the fact that the preliminary storage number for next week is somewhere in the neighborhood of 110 billion cubic feet to 120 Bcf. But again, just like I said [before]... there's not a whole lot of downside left here."

Friday's action comes after a major confrontation between Occupy Wall Street protestors and authorities seemed to have been averted after New York City officials opted to postpone the cleanup of the protestors' camp site in Zuccotti Park near Broadway, although there were still clashes between members of the movement and police.

TAC Energy trader Mark Anderle said he doubts the protests will have any direct impact on the energy markets - "most of the trading is done away from the floors now anyhow ... what I think is more important is the manifestation of a generally negative social mood, which seems to have been building in this country for some time now."

"I believe that there are many more people who would love to protest Wall Street or the Fed or Congress, etc., and probably have much better arguments for doing so than the current group," Anderle said. "The reason you don't see these people protesting -- yet -- is that they have a job."

MF Global senior energy markets strategist Richard Ilczyszyn weighed in on the protests as well, saying: "I love this country! If you want to protest you have that right," adding "in this case I think the protesters are in the wrong state and city -- Washington D.C. baby."

"I think the protestors have a right to protest, but they should allow the city to clean up the area," added Flynn of PFGBest. "They could take a break and come back to a clean park! Besides a few of them might need to shower anyway."

Chevron(CVX) was gaining 2.1% to $99.82; Hess(HES) was adding 3.7% to $57.12; Occidental Petroleum(OXY) was advancing 3.5% to $84.35; Marathon Oil(MRO) was rising 2.5% to $24.24; Devon Energy(DVN) was increasing 2.3% to $60.42; Carrizo Oil & Gas(CRZO) was rallying 8.8% to $25.04; and Brigham Exploration(BEXP) was gaining 3.9% to $29.79.

-- Written by Andrea Tse in New York.

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