Crude has popped nicely from Friday lows along with the rest of the risk trade. Markets are recovering quickly from the negative movements resulting from Dubai’s debt issue. The EUR/USD and gold have both returned to respectful levels technically speaking, and the S&P futures are battling with 1100 once again. However, it remains to be seen whether another flash of negative news will hit the wires concerning the impact of Dubai’s money problems. Furthermore, investors will receive key economic data points from China, the UK, and the US along with an RBA Rate Decision in the next 24 hours. That being said, markets could be in for further volatility. Considering crude is negatively correlated with the Dollar and positively correlated with the risk trade, any developments and subsequent broad-based market movements would likely have a noticeable impact on crude. As a result, investors should keep an eye on the EUR/USD’s interaction with 1.50 and the S&P’s behavior near 1100.
Technically speaking, although crude continues to trade below our trend lines, the futures have technical cushions in the form of 11/25 and 11/27 lows along with the psychological $75/bbl level. Therefore, it appears as though crude could have a solid support system waiting in the wings. As for the topside, crude faces multiple downtrend lines along with 11/26 highs and the psychological $80/bbl level.
Resistances: $76.70/bbl, $76.94/bbl, $77.38/bbl, $77.77/bbl, $78.10/bbl, $78.63/bbl
Supports: $75.86/bbl, $75.54/bbl, $75.14/bbl, $74.42/bbl, $74.19/bbl, $72.88/bbl
Psychological: $75/bbl, $80/bbl, $70/bbl