Crude futures bottomed yesterday as we anticipated and pieced together a decent rally on climbing volume. However, the rally was deflected by our 1st tier uptrend line today, and is hovering back around the psychological $60/bbl level. Crude futures are struggling to tack onto yesterday’s gains after OPEC said it expected global consumption of oil to increase by 0.6% in 2010, far lower than the IEA’s estimate of 1.7% growth.

In addition to the news from OPEC, investors got some mixed economic data. Although retail sales came in two basis points above analyst expectations, the core number was two basis points below expectations. Additionally, the EU reported weak economic sentiment and worse than anticipated industrial production data. Hence, crude is being held down despite the S&P’s run to 900.

On an interesting note, Nigeria released Henry Okah from jail, the leader of MEND who has been incarcerated since September 2007. Nigeria believes this could be the
1st step in repairing relations with MEND and ending the attacks on Nigeria’s oil operations. The prospect of peace in Nigeria could be applying further downward pressure on the price of crude, though it is uncertain how large of an impact Okah’s release will have on negotiations with MEND.

Technically speaking, July 9th highs and our 1st tier uptrend line serve as the two largest barriers hindering accelerated immediate-term gains in crude. The futures have edged back below our 1st tier downtrend line, and $60/bbl continues to have a noticeable psychological influence on movement. At least crude has created some space between price and the two key cushions to the downside, May 18th lows and our 1st tier uptrend line.

Meanwhile, the Pound and Euro have gained back some ground on the Dollar, though neither currency pair has made a technical breakout to the upside. Additionally, the S&P futures are hanging around the highly psychological 900 level, telling us the markets are still in a state of directional confusion. Hence, despite this week’s stability and improvement, there remains a heavy downward momentum on price. 

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

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