Crude is consolidating along with gold and all major Dollar crosses. In another sign of encouragement to the upside, crude futures are sticking above the highly psychological level during the consolidation process.

The futures are presently struggling with our 2nd tier downtrend line, the legitimate fundamental barrier before a retest of 2009 highs. Investors continue to ignore the rising crude inventories and are encouraged by the fact that a weaker Dollar should stimulate global demand for the Dollar-pegged commodity.

Furthermore, even though recent production and manufacturing data points from the U. S. have been negative, they indicate stabilization with a possible upturn.

Quantitative easing is already lowering interest rates on mortgages and we should expect the same for automobile loans, possibly resulting in higher automobile sales and consequently higher consumption of crude.

Lastly, the OPEC cuts made this year were large and they are intact, so supply is still choked off. Hence, crude futures continue their run to the upside.

Even though the indicators are pointing towards more near-term gains, we are uncertain whether the futures can head past January highs and we will have to analyze this in the futures should the situation present itself.

Fundamentally, we hold our supports of $50.98/bbl, $50.53/bbl, $50.03/bbl, and $49.49/bbl. The $50/bbl becomes a psychological cushion. To the topside, we maintain our resistances of $51.56/bbl, $52.09/bbl, $52.53/bbl, and $53.18/bbl. Crude futures are currently trading at $51.58/bbl.

Copyright 2009 FastBrokers, Latest Forex News and Analysis for Forex, Bullion and Commodity Traders. 

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