Crude Balances After Positive Consumer Sentiment

Crude futures are recovering from earlier losses in reaction to the better than expected UofM consumer sentiment number.  Improving consumer sentiment implies the possibility of higher future consumption, production, and manufacturing of goods and consequently consumption of crude.  The consumer sentiment data helps counteract negative sentiment inflicted earlier by China’s second request for a new global monetary standard.  However, the consumer sentiment number isn’t necessarily game changing, and a heavy negative sentiment remains in the marketplace.  We’ve seen cautionary statements from the Fed, BOE, and ECB this week along with a troubling near-term outlook from investment guru Warren Buffet.  Meanwhile, despite improvements in both the EUR/USD and GBP/USD, a depreciating dollar isn’t enough to offset today’s downward momentum.  Therefore, investors seem troubled about the overall state of the global economy and demand side of crude’s equation.

Regardless of today’s pullback, crude has registered larger volume to the upside than downside on the 1-hour, showing bulls are still in the driver’s seat.  Crude is finding relief in our 2^nd tier uptrend line, and has our 3^rd tier to fall back on should today’s decline pick up speed.  Even if investors are concerned about the demand for crude, weekly inventories have come in shallow six out of the last seven releases.  Therefore, crude continues to experience relative strength despite uncertainty in the S&P futures.  We wouldn’t be surprised to see crude bounce between our trend lines for the time being as equities and the Dollar decide upon a near/medium-term direction.

Present Price: $69.40/bbl

Resistances: $69.83/bbl, $70.37/bbl, $71.07/bbl, $71.78/bbl, $72.54/bbl

Supports: $69.16/bbl, $68.70/bbl, $68.09/bbl, $67.68/bbl, $67.03/bbl

Psychological: $65/bbl, $70/bbl, $75/bbl

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