Crude futures continue their climb towards $75/bbl after the futures experienced a pop in positive volume yesterday. The buying interest came in reaction to lower than expected weekly inventories and better than expected manufacturing production from the UK. Crude is leaving behind our 2nd tier uptrend line in the process. Normally, crude futures would likely skyrocket after yesterday’s inventory shortfall, yet gains have been tempered by sideways movement in U. S. equities.

Many analysts are anticipating a pullback in the S&P, which would have a negative impact on crude due to their positive correlation. However, crude is experiencing relative strength since the global economic stimulus packages coupled with production cuts from OPEC continue to send price higher. Therefore, it seems the occurrences that would knock crude out of its upward trajectory would be a slowdown in the recovery of global production/manufacturing economic data or a production increase from OPEC. Meanwhile, the Dollar is depreciating again today, giving a little more energy to crude’s uptrend since the dollar-denominated commodity becomes a more attractive import.

Crude futures are receiving increased interest to the upside and there is little reason to be negative on crude technically or fundamentally. The only question we have is ‘where is fair value?’ Regardless, bulls are back on attack and there is not much else to say. 

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