Crude Oil Reaches New Highs For 2008

Crude leapt past everything over the past 24 hours on significant volume.  Crude passed previous 2009 highs and our 3^rd tier uptrend and downtrend lines.  The combination of lower than expected weekly inventories and ADP Non-Farm Employment change data provided the bull catalyst we were anticipating.  Crude’s charge finally topped out around $58.50, forgoing a test of $60/bbl as investors take profits.  Crude is quickly climbing back to a respectable level on the belief that the global economy is rebounding and demand will rebound with production and consumption.  A negative repercussion of crude’s recovery is that it reignites the possibility of rapid inflation impacting economies as central banks pass record stimulus packages while participating in alternative liquidity operations.

While crude could continue to experience more near-term downward pressure as investors take profits, the futures have taken another large step forward technically.  The bull trend remains in the driver’s seat unless we get negative news from financials or a stream of disappointing economic data.  Additionally, the volume is there to back crude’s action, showing the upward movement was made with conviction.

Though we can provide only near-term technical guidance until crude futures calm, we can tell you that $60/bbl should serve as a psychological barrier.  We find additional resistances of $58.01/bbl and $58.57/bbl.  To the downside, we see supports of $56.84/bbl, $56.61/bbl, $56.34/bbl, $55.90/bbl, and $55.58/bbl.  Crude is presently trading at $57.23/bbl.

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