Crude futures are logging solid gains thus far today as the S&P futures pop above 1100 and previous 2009 highs while the FX markets experience another session of broad-based Dollar weakness. U.S. equities are trading higher today despite negatively mixed data and the S&P futures are looking to finally break free of their month long battle with 1100. Although the Empire Index, Business Inventories, and Core Retail Sales all disappointed analyst expectations, the headline Retail Sales number outperformed by 4 basis points. The outperformance of the headline figure implies a boost in automobile purchases. The concept of more cars on the road also implies a larger aggregate demand for gasoline over the medium-term, thereby benefiting the price of crude today.
Meanwhile, gold continues to set new all-time highs while the Dollar experiences broad-based weakness. The negative performance of the Dollar makes crude a more attractive purchase for foreign countries since it is a Dollar-denominated commodity. Hence, crude's negative correlation with the Dollar is still in play. That being said, investors should keep an eye on the EUR/USD's interaction with its highly psychological 1.50 level. Any topside breakout in the EUR/USD beyond 1.50 and previous November/October highs could prove to be a positive catalyst for crude due to their positive correlation. Additionally, investors will receive any wave of key econ data from the U.S. tomorrow. Should U.S. equities reactive positively, crude futures may receive another topside boost.
Technically speaking, crude still faces multiple topside barriers in the form of our 1st and 2nd tier downtrend lines along with the psychological $80/bbl level. Furthermore, a movement back above our key 1st tier uptrend line could prove to be a positive development for crude. As for the downside, there are a couple potential uptrend lines we can form while intraday and Friday lows serve as technical cushions.
Resistances: $78.62/bbl, $79.15/bbl, $79.55/bbl, $80.02/bbl, $80.45/bbl, $81.01/bbl
Supports: $77.85/bbl, $77.34/bbl, $77.03/bbl, $76.54/bbl, $75.54/bbl
Psychological: 2009 highs, $75/bbl, $80/bbl