Crude Oil Pops Despite Wave Of Negative U.S. Data

Crude futures have popped above our 1^st tier downtrend line despite a combination of higher than expected crude inventories and weaker than expected ADP and Chicago PMI releases.  Crude’s strength in reaction to these data releases is counterintuitive, and leads us to be believe there may be unreleased news moving the futures.  The only reasonable explanation we can find is that crude futures are strengthening off of present weakness in the Dollar and relative stability in U.S. equities.  The disappointing ADP and Chicago PMI releases add onto yesterday’s weak CB Consumer Confidence number.  Furthermore, investors shouldn’t forget Friday’s durable goods data left something to be desired.  Therefore, crude’s supply and demand fundamentals are coming up red.

However, crude futures continue to be buoyed by the resilience of U.S. equities and the anticipation that OPEC will intervene if crude futures deviate too far from its desired $68-$73/bbl range.  In fact, crude is trading back above the $68/bbl mark along with our 1^st tier uptrend line.  The next technical barriers to the topside are our 2^nd and 3^rd tier downtrend lines along with the psychological $70/bbl.

As for the downside, crude is supported by 9/24-9/30 lows along with our 1^st tier uptrend line and the psychological $65/bbl level.

Price: $68.68/bbl

Resistances: $68.80/bbl, $69.06/bbl, $69.31/bbl, $69.84/bbl, $70.25/bbl, $70.73/bbl

Supports: $68.39/bbl, $68.04/bbl, $67.67/bbl, $67.03/bbl, $67.07/bbl

Psychological: $70/bbl, $65/bbl

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