See crude at $130-135/bbl in short-term: Comm Warrants

Q: What’s your sense- USD 145 to USD 136 per barrel? Will we see crude cooling down significantly in the near-term?

A: It’s been very interesting over the last couple of days. I was on the Nymex last Thursday and saw it hit  USD 146 per barrel. As we know, Friday was ‘Thankgiving Day’ - so the market was closed and now we are not seeing it trade at USD 136-137; a bit of correction. But markets are at an all time highs.

I think over the short-term, we could see USD 130-135 per barrel. But certainly by the end of summer, I wouldn’t be surprised to see USD 150 per barrel or higher, which is that mid to late August period and there are couple of factors for that.

First, there could  be little bit of demand destruction coming out of the US due to high prices. But I think the rest of the world’s consumption pattern hasn’t hanged significantly . The second is leading into the tradition of hurricane season which commences at the tail end of July all the way to November.

Q: Even if it does scale back to the USD 130 per barrel mark - for a trader, do you think that would be a level to buy or would you start worrying about what the next move might be for crude?

A: At the moment we went neutral this morning. We were bullish and we have gone neutral on natural gas heating oil and crude oil to observe the next three-five trading sessions.

I wouldn’t be surprised if it was at USD 128 per barrel; I wouldn’t be surprised if it was at USD 148 per barrel in the next five trading sessions; that is how volatile it is and when markets are at all time highs, then it’s not uncommon to see quite volatile trading sessions. But fundamentally, I think demand isn’t going away and we will certainly see far high prices.