Crude futures have experienced some eye-popping volatility over the last couple sessions, fluttering between our trend lines. The indecisive movements reflect investor uncertainty concerning the economy as a whole.

While investors are not willing to give up on the uptrend, the downtrend is still sitting in the driver's seat with investors unwilling to commit above our 2nd tier downtrend line.

The highly psychological $50/bbl area continues to play a lead role as prices are gravitating here. Naturally, the key driving force behind the demand structure of crude is the overall health of the U. S. economy.

Energy investors are waiting to see if the recovery in U. S. equities is legitimate before extending the rally in crude beyond the present fundamental hindrances.

Investors are now being bombarded by news from the supply side after OPEC stayed quiet for quite some time. Crude imports are rising considerably from Russia and Brazil, likely an aftereffect from Obama improving upon diplomatic relations with the two nations.

OPEC is vocalizing its discontent over the development since a rise in imports from Russia and Brazil dilute their massive production cuts implemented over the last 6 months.

The new sources of crude are placing a new downward pressure on the price and could have a noticeable impact for the time being. We wouldn't be surprised to see a more aggressive reaction from OPEC if the trend continues with the possibility of more production cuts on the table.

Despite the developments supply-wise, crude futures should still maintain a positive correlation with the S&P futures, though they may be less inclined to fully participate in any large movements to the upside.

We may not have to worry about that today since the economic data disappointed analysts this morning, showing a surprising decline in PPI and Retail Sales.

These numbers raise a red flag, cautioning that the recent improvement in consumer sentiment could be short-lived, placing more downward pressure on crude futures.

Fundamentally, we find resistances of $50.39/bbl, $51.03/bbl, $51.59/bbl, $52.02/bbl, and $52.49/bbl. To the downside, we see supports of $49.81/bbl, $49.28/bbl, $48.87/bbl, $48.37/bbl, and $47.79/bbl. Crude futures are presently trading at $49.98/bbl.

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

Disclaimer: For information purposes only. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained. There is a substantial risk of loss in trading futures and foreign exchange.