Crude futures posted solid gains yesterday, popping above their psychological $75/bbl level after crude inventories came in well shy of analyst expectations. The surprise drop in inventories coupled with a pullback in the Dollar allowed crude futures to piece together a positive session, further distancing themselves from December lows and the psychological $70/bbl level. Additionally, OPEC’s decision to keep production unchanged allows investors to price crude futures more on immediate-term data. Meanwhile, the U.S. will release weekly Unemployment Claims and Durable Goods Orders data. It will be interesting to see how crude futures react should today’s data exceed analyst expectations. Positive U.S. econ data could buoy the Dollar and encourage more Greenback purchases, a negative catalyst for crude futures. On the other hand, positive employment and consumption data is encouraging for crude’s aggregate demand, a positive catalyst for crude. Therefore, crude’s reaction to today’s data points could be telling in regards to whether the futures are following the Dollar or U.S. econ data. Activity should cool down as the session progresses as investors check out for the Christmas holiday. Therefore, crude futures could stay within the $75/bbl-$80/bbl trading range for the time being.
Technically speaking, crude futures have multiple uptrend lines serving as technical cushions along with 12/23 and 12/22. Additionally, the psychological $75/bbl level could serve as a technical cushion should it be tested. As for the topside, crude futures still face multiple downtrend lines along with December highs. Furthermore, the psychological $80/bbl area could serve as a solid technical barrier. Meanwhile, a pop above our 3rd tier downtrend line could yield a near-term run towards $82/bbl since our 3rd tier runs through November highs.
Resistances: $77.45/bbl, $77.80/bbl, $78.16/bbl, $78.80/bbl, $79.57/bbl
Supports: $76.88/bbl, $76.46/bbl, $76.05/bbl, $75.52/bbl, $74.75/bbl
Psychological: $75/bbl, $70/bbl, December Highs and Lows