I’d initially regarded this rally, now in its eighth day, as a dead-cat bounce. However, with Saudi Arabia growing increasingly nervous about the Shiite takeover of neighboring Yemen and about to enter the fray there on war footing, the steepening, upward skew in oil prices is not likely to abate any time soon. I’m not going to hazard a price target for the rally, but I wouldn’t suggest trying to intercept it if you should come up with a target of your own. ______ UPDATE (March 26, 11:46 p.m. EDT): The rally turned sloppy overnight when traders decided that Saudi airstrikes on Yemen jihadis probably wouldn’t end the world. There was more than a little hubris in their collective sigh of relief , however, and because the end-of-the-world fear is not entirely farfetched, I’d strongly suggest trading crude with a bullish bias for now. The hourly chart suggest upside potential to as high as 55.29 over the near term (A=47.00 at 4:00 a..m. on 3/25).
