Crude futures have continued their descent beneath $70/bbl and are trading well below our important 1st tier uptrend line in reaction to the S&P futures sinking to their critical 1000 level. Crude futures are now holding onto our previous bottom-end support as bulls fight to keep the S&P above water. We witnessed an increase in sell-side activity in both crude and the S&P futures yesterday as investors took profits amid rising uncertainty concerning the durability of the global economic recovery. The new bear market in the SCI coupled with declining Chinese exports hurt the near-term prospect for the future demand for commodities. However, today's weekly crude oil inventories data showed a slight decline. Although, the number was 400k barrels above analyst expectations. The constraint in supply is helping keep crude futures somewhat afloat despite the sudden negativity attacking the global marketplace.
Crude futures are stabilizing today with the S&P futures sitting at 1000 while the GBP/USD and EUR/USD trade just above their respective psychological supports. However, the spike in sell-side volume coupled with the failure of our 1st tier uptrend line and $70/bbl is not favorable for the near-term outlook for crude. Crude futures may opt to continue today's stabilization process as investors await tomorrow's wave of economic data. Tomorrow's data points and ECB meeting should prove to be important for the near-term trajectory of the Dollar. Hence, crude investors should take notice and monitor the present appreciation of the Dollar. Should the GBP/USD test 1.60 and the EUR/USD 1.40 crude futures should react negatively. Conversely, better than expected data could help the Dollar crosses recover and provide a much needed boost to the topside for crude. Meanwhile, the S&P's deterioration is certainly a cause for concern since it only fuels speculation regarding future demand for crude. Momentum has clearly shifted to the downside in both crude and the S&P, so investors should monitor the situation closely. If crude futures can't hold intraday lows and our new 1st tier downtrend line, a test of the psychological $65/bbl could be in order. As for the topside, crude faces tough obstacles in the form of our 2nd tier downtrend line and the highly psychological $70/bbl level.
Resistances: $67.92/bbl, $68.54/bbl, $68.99/bbl, $69.50/bbl, $69.97/bbl
Supports: $67.37/bbl, $66.88/bbl, $66.64/bbl, $66.23/bbl, $65.72/bbl
Psychological: $65/bbl, $70/bbl