{"id":4141,"date":"2009-10-02T10:28:01","date_gmt":"2009-10-02T15:28:01","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=4141"},"modified":"2009-10-02T10:28:01","modified_gmt":"2009-10-02T15:28:01","slug":"crude-recovers-from-earlier-losses-hovers-around-70bbl","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2009\/10\/02\/crude-recovers-from-earlier-losses-hovers-around-70bbl\/","title":{"rendered":"Crude Recovers from Earlier Losses Hovers Around $70\/bbl"},"content":{"rendered":"

By Fast Brokers<\/strong> – Crude futures have recovered from intraday lows inflicted by worse than expected U.S. employment data.\u00a0 Rising unemployment and declining consumption should take its toll on demand for crude.\u00a0 Additionally weekly inventories registered a sizable surplus for the second week in a row.\u00a0 Despite the negative supply and demand fundamentals crude continues to prove resilient.\u00a0 In fact, yesterday crude showed a muted reaction to negative data compared to the large pullback in U.S. equities.\u00a0 Today crude is being buoyed by the positive performance of the EUR\/USD in the face of another weak session in U.S. equities.\u00a0 Therefore, crude futures continue to carve their own path in the midst of volatile performances of both the Dollar and U.S. equities.\u00a0 The stability of crude is mysterious and we can only speculate as to the reasons behind recent resilience.\u00a0 Tension surrounding Iran\u2019s nuclear program could be buoying the price of crude.\u00a0 However, Iran made concessions and appears to be playing ball, so this line of reasoning doesn\u2019t carry much weight.\u00a0 Another possibility is that the regulation curbing trading of commodity futures could be lowering volatility.\u00a0 Lastly, investors may be reluctant to send crude out of its trading range due to the fear that OPEC will manipulate production to keep crude within its desired $68-$73\/bbl trading range.\u00a0 We believe the last reason may be the more prominent driving force behind crude\u2019s resilience, yet we are merely speculating.<\/p>\n

Regardless of the reasoning, crude has climbed back above our 2nd tier uptrend line and is trading back around the psychological $70\/bbl level.\u00a0 Crude futures registered large buy-side volume on Wednesday\u2019s up-bar, indicating investors are standing behind crude\u2019s recent step higher.\u00a0 However, the futures are still stuck beneath our 3rd tier downtrend line and multiple September highs, not to mention the psychological $75\/bbl level.\u00a0 Therefore, gains should be limited to the topside as long as these technical barriers are in place.\u00a0 As for the downside, crude futures above our 1st and 2nd tier uptrend lines along with previous September lows and the psychological $65\/bbl level.\u00a0 Due to the wedge taking place and the inconsistency of crude\u2019s behavior with its correlations, we have a neutral outlook trend-wise on crude.\u00a0 Crude\u2019s fate will ultimately rest on the S&P\u2019s ability to bottom and the Dollar\u2019s behavior over the near-term.\u00a0 Any wave of massive Dollar appreciation coupled with an exacerbated downturn in U.S. equities would likely drag crude futures lower, and vice versa.\u00a0 Since we are presently negative on the EUR\/USD, GBP\/USD, and S&P trend-wise, we are tempted to have a negative outlook on crude.\u00a0 However, we will stay in neutral as long as crude bounces around in its present wedge.<\/p>\n

Price: $69.91\/bbl<\/p>\n

Resistances: $70.01\/bbl, $70.36\/bbl, $70.73\/bbl, $71.13\/bbl, $71.38\/bbl, $71.78\/bbl<\/p>\n

Supports: $69.34\/bbl, $68.97\/bbl, $68.48\/bbl, $68.08\/bbl, $67.53\/bbl<\/p>\n

Psychological: $70\/\/bbl, $65\/bbl, $75\/bbl<\/p>\n

\"\"<\/a><\/p>\n

Market Commentary<\/strong><\/em> provided by Fast Brokers<\/strong><\/span><\/span>.<\/a><\/p>\n

Disclaimer:<\/strong> FastBrokers\u2019 market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell\/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.<\/p>\n

Risk Disclosure:<\/strong> There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Fast Brokers – Crude futures have recovered from intraday lows inflicted by worse than expected U.S. employment data.\u00a0 Rising unemployment and declining consumption should take its toll on demand for crude.\u00a0 Additionally weekly inventories registered a sizable surplus for the second week in a row.\u00a0 Despite the negative supply and demand fundamentals crude continues … <\/p>\n

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