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Can a Crude Oil Margin hike control demand?

Published on May 10, 2011, by in Trading Session.

CME Group Inc, will increase crude oil margins another 25% at the closing of the bell making hedgers and speculators fill in the gap to cover their overnight positions. For overnight margins, crude will be $8,438 per contract from $6,750. History has a way of repeating itself therefore, we can expect a temporary sell off later on today as traders readjust their positions to compensate for the increased margin. Silver and Gold took a huge drop after margins were increased just a week ago so we are expecting the same to happen to crude oil prices. Currently June Future contracts are trading above 103.70 near todays highs of 104.22. We are expecting to find support just under 102. The Mississippi Flood is causing an increase in prices as the flood may decrease speculative output supplies. The margin increase will have an immediate effect on the market as the concerns of flooding will continue to keep the bullish trend alive.

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