The G20 meeting was the highlight of the week and the market decided to take the world leaders show of unity and words about fighting back at face value with equity and commodities trading higher.

Previously during the week energy markets had come under renewed pressure as a combination of a stronger dollar and weak growth prospect drove the price of WTI Crude back below $50. These losses reversed sharply on Thursday as news from the G20 resulted in a 9% rally.

The market is for now willing to begin contemplating that the worst may behind us, something that the price action during March has been supporting.

Crude Oil for now will take its main direction from the value of the Dollar as the demand and supply situation is evenly poised. A dramatic rally higher from here however seems unlikely as we are heading into the seasonally weak demand months of April and May.

OPEC seems to have quietly accepted that to high oil prices will be counterproductive as it will prolong the current recession. On that basis Crude at $50 per barrel seems to have been accepted as a pragmatic price for now.

Technically May WTI Crude found support at the 20 day moving average before the Thursday rally took prices back into the fifties. A prolonged period of sideways trading between $55 and $47.5 is the most likely outcome with risk in our opinion mostly to the downside.

Natural Gas for May delivery continues to suffer from ample supply and weak demand and made a new 6 ½ year low at $3.63. It currently sits rock bottom on the commodity return table at -33% on the year. Technically it trades between trend line support at $3.54 and 20 day moving average resistance at $3.98.

Gold and silver reacted negatively to the news from the G20 as hopes where raised of an economic recovery. More importantly sources suggested that the IMF should be allowed to sell Gold over and above existing limits. Currently the IMF can only sell 403 of its total of 2800 tons into the open market so any news on this front will be watched closely.

We have argued recently that downside risk to Gold exists given the failure in breaking higher despite the ongoing buying of ETF and futures. Technically however it continues to trade in a wide range between $950 and $890, so play the range for now but look out for a major move once the breakout occur.

Having mentioned Natural Gas I should also mention the strongest performing commodity in 2009 which is Copper. It has rallied an impressive 35% from the depressed levels at the end of 2008 and is heading for the third weekly gain on increased speculation that the worst slump in demand for industrial metals may be over.