Crude futures are recovering Wednesday morning after Tuesday's selloff in reaction to disappointing PPI and Retail Sales data. Yesterday's downturn was not significant and crude has risen back above the highly psychological $50/bbl.

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 development 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.

The U. S. will release weekly crude inventories today, normally a market mover. Fundamentally, we maintain our resistances of $50.39/bbl, $51.03/bbl, $51.59/bbl, $52.02/bbl, and $52.49/bbl. To the downside, we hold our supports of $49.81/bbl, $49.28/bbl, $48.87/bbl, $48.37/bbl, and $47.79/bbl. Crude futures are presently trading at $50.29/bbl.

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