Crude futures are consolidating just below $75/bbl and their previous 2009 highs as the Dollar's slight appreciation counterbalances the S&P futures' positive performance. Correlations aside, near-term momentum is clearly in favor of the bulls since we haven't seen a convincing pullback in crude for a while. However, further immediate-term consolidation with the possibility of a slight pullback is certainly feasible since crude faces some hefty technical barriers to the topside. Crude's medium-term uptrend should remain intact as long as the futures can stay above our 1st tier uptrend line and the highly psychological $70/bbl. Meanwhile, the S&P futures are separating themselves from 1000, a key development psychologically. Crude futures are responding by leaving $70/bbl behind with the pick-up in domestic and global manufacturing and production. Investors got more good news this morning with U.S. consumer confidence data come in ahead of analyst expectations. The improvement in the confidence of America's citizens should apply an upward force on crude's price since it implies greater demand for crude down the road.
Investors are still debating the longevity of the current economic recovery and whether the global markets will experience a double-dip recession. Investor contemplation is keeping the S&P futures at bay and crude below $75/bbl. However, we will receive important economic data as the week progresses. If the data outpaces analyst expectations, this could propel crude futures to fresh 2009 highs. Investors will be watching tomorrow's weekly inventory release closely since last week's number registered a dramatic shortage. We attributed the shortage to the cash for clunkers program and the artificial boost this provided to production and demand for crude during the manufacturing process along with the transportation of finished goods (autos). We anticipate the added consumption of crude resulting from the cash for clunkers program could bleed over into this week's release as well. Investors will also be paying close attention to tomorrow's durable goods orders release since the headline figure includes autos. Meanwhile, if the S&P futures can breakout further and bring the EUR/USD with it, this could send crude futures beyond their technical topside barriers.
Resistances: $73.99/bbl, $74.24/bbl, $74.84/bbl, $75.21/bbl
Supports: $73.56/bbl, $73.15bbl, $72.73/bbl, $72.32/bbl, $72.02/bbl
Psychological: $70/bbl, $75/bbl