Crude Daily Commentary for 4.24.09

Crude futures have catapulted past our downtrend line and the highly psychological $50/bbl after U.S. Durable Goods Orders came in better than analyst expectations.  Crude has overcome two crucial barriers in one sling swoop, but are backing away from our 1st tier downtrend line right now.  Despite the hesitation, crude futures have made a clear statement to the topside, and we wouldn’t be surprised to see more large near-term gains.  After all, we know just how volatile crude can get. 

Encouragingly, the present performance of crude could be indicating a breakout in the S&P futures due to their positive correlation.  Furthermore, a breakout in the S&P futures above our 3rd tier downtrend line would only fuel the upward momentum in crude.  Finally, the resurgence of crude comes despite two straight weeks of very discouraging inventory levels.  Hence, crude futures have some real energy behind them and only need an extra push from external economic factors to really take off.  A recovery in durable goods implies stabilization in automobile sales, which consequently implies a rise in demand for oil. 

Additionally, the strong performance in the EUR/USD in reaction to better than expected production and services PMI data shows the global demand for crude is recovering.  If the crude futures should rise above our 1st tier uptrend line the next barrier would be our new 2nd tier downtrend line. 

Fundamentally, we find supports of $51.02/bbl, $50.70/bbl, $50.21/bbl, $49.70/bbl, and $49.26/bbl.  To the topside, we see resistances of $51.47/bbl, $51.89/bbl, $52.36/bbl, $52.85/bbl, and $53.35/bbl.  $50/bbl turns becomes a key psychological cushion while $55/bbl serves as a psychological barrier once more.  Crude is presently trading at $51.20/bbl.

Crude Daily Commentary for 4.24.09

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