Crude Drop Below $80/bbl in the Wake of Weak U.S. Data

06 November 2009 @ 12:59 pm EDT

Crude's psychological $80/bbl level has finally given way as our 2nd tier downtrend line reaches an inflection point with what are now our 2nd and 3rd tier uptrend lines. Crude futures have even declined beneath our new 1st tier uptrend line, which runs through previous November lows. Therefore, November lows could be in jeopardy, meaning a retracement towards the psychological $75/bbl level may be in order. However, the EUR/USD, GBP/USD, and gold are holding up relatively well considering today's negative data, buoying crude and helping prevent a more exacerbated pullback for the time being. That being said, any broad-based preference for the Dollar as the session progresses may be enough to knock crude towards $75/bbl. As for the topside, crude still faces our two downtrend lines while the psychological $80/bbl continues to serve as a tough topside barrier.

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