Crude oil futures have rebounded in morning trading, moving almost $4 higher before settling just shy of $56/barrel after hitting a morning high of just short of $57/barrel.
Overnight trading saw nearby crude oil futures dip into the $53 range before starting a rally around 9:00 AM Central Time Tuesday before leveling off and turning back lower around 11:00 AM.
The up move comes a day after many analysts said $40/barrel was the likely low end for crude oil futures, a price point that OPEC leaders said was likely late last week as they announced production from the Middle East and Africa would remain unchanged despite increasing world stocks driven mainly by growing U.S. production in the Bakken Formation region in the northern Plains.
Does Tuesday morning's price action have implications for farmers? Whether or not to book fuel supplies for the 2015 crop year has been widely discussed in the last few days, and while much depends on your individual risk tolerance, Kluis Commodities grain analyst and broker Al Kluis says it's time to buy.
"Crude Oil prices have reversed today. Book 50% minimum of your spring fuel needs now," he says. "Timing is right for a low by next Monday; we did only recommend 50%, so we can buy the last part if it dips lower. Also not a crystal ball decision but a lot of customers need a tax deduction."
Still, not everybody's sold on a market reversal just yet. Tuesday's move could just be a temporary point of buying, and it may not last long.
"I’m the last guy to call a low in oil. $3.50 range today and no indication that the bleeding has stopped," says Peter Meyer, senior director for agricultural commodities at PIRA Energy Group. "Tough call; could go either way at this point but hedgers are definitely buying some on a scale down basis."
- Chat: Will the 'oil glut' influence grain prices?
- Also: Are you locking in fuel?
- Read more: With $40 Oil Coming, Should You Buy All Your 2015 Fuel Now?
- Tying to the Grains: 'Odd Bedfellows' in the Grain Market