Crude Sinks Following Disappointing Consumer Confidence Number

Crude futures have dipped back beneath our 2^nd tier downtrend line after CB consumer confidence came in roughly 10% below analyst expectations.  The negative showing in consumer confidence overpowers the slightly better than anticipated housing and PMI data.  Crude is influenced more by consumption rather than the other figures, and the futures are reacting accordingly.  The militant attacks are proving to be a temporary shock as we anticipated, and we believe the demand side of the equation will return to focus rather quickly.  Investors should remember the IEA lowered its five-year projection for growth in consumption of crude yesterday.  The mixed data points today are reigniting concern regarding the global demand for crude.  Flying under the radar is the news that China is raising the price for gasoline and diesel fuel to try and keep pace with crude’s ascent.  China’s action has a negative impact on demand, creating further downward pressure on price.

Meanwhile, the Greenback is appreciating across the board and gold is dropping like a rock in reaction to the negative consumer confidence data.  Crude is positively correlated with these investment vehicles, indicating we could see crude’s pullback pick up pace towards $70/bbl and our 1^st and 2^nd tier uptrend lines.  We expect volume to increase as the week progresses due to the plethora of data investors will receive from around the globe.  While the decline in consumer confidence certainly creates an immediate-term drag on crude, our uptrend lines should hold until investors see how Wednesday’s data fares.

Present Price: $70.27/bbl

Resistances: $70.57/bbl, $71.07/bbl, $71.57/bbl, $72.25/bbl, $72.87/bbl

Supports: $70.05/bbl, $69.51/bbl, $68.92/bbl, $68.42/bbl, $68.03/bbl

Psychological: $70/bbl

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