Technical Recap

Bulls really controlled the action last week beginning with a boost off of the 200-day moving average followed by reinforced settlements above the crucial $72.50 benchmark area.  Prices trended higher for the week through Thursday to $75.70 before pulling back on Friday on a round of profit taking ahead of the 50 and 100-day moving averages.  The market closed firm on the week just above the 7-week dowtrend channel at $74.00 level with a minor uptrend potentially developing early this week.

We are still maintaining settlements below the broken key longer term Quarterly trend lines at the $77.00 to 78.00 range leaves the market vulnerable to renewed selling.  With options expiration on Today (Wednesday), we anticipate rallies early this week, and then begin fade against $78.00 to 80.00 leading to a turnover later in the week.

Technical Outlook

Upside:

The market reversed the 7-week downtrend to start the week off rallying off the $74.00 level on Tuesday. Maintaining settlements above $74.00 to 75.00 supports advances this week targeting the key broken Quarterly trends in the $77.00 to 78.00 range.  Trade or settlements above $78.00 brings the $80.00 psychological mark easily in range for the week.  Any settlements above $80.00 will provide solid Bullish reinforcement with the potential to propel the market back to the Jan 2010 highs at $84.00.  If momentum fades out in the $77.00-78.00 range, longs should cover all positions.

Downside:

Failing rallies at the $77.00-78.00 range generates a sell signal for an initial drive back to the broken 7-week downtrend at $74.00.  Settlements below $74.00 reinforces short term weakness as it puts prices back the weekly downtrend channel while violating the minor daily uptrend.  The objective below $74.00 is placed at the key $72.50-71.75 Support range where shorts should initially scale back positions.  Trade and settlements below $72.50-71.75 will rekindle sustainable Bear forces triggering sell offs targeting the current 2010 lows at $70.00 to 69.50 while bringing the next major objective in range at $68.50-68.00.  A settlement below $70.00 on the week, or trade that takes out the $68.00 level, lines up for $65.00 oil in the coming weeks.

Whats Making the News

1. Crude futures ended sharply higher Tuesday as investors bet that Greece’s debt problems wouldn’t spill over to dent demand for commodities. Light, sweet crude for March delivery settled up $2.88, or 3.9%, at $77.01 a barrel on the New York Mercantile Exchange in its biggest one-day gain since Sept. 30. Brent crude on the ICE futures exchange settled $3.17, or 4.4%, higher at $75.68 a barrel.
2. Crude oil prices were higher Tuesday after a new report showing that manufacturing activity is on the rise in the New York region and on a weaker US dollar that made purchases in other currencies cheaper for buyers.
3. With no indication of a fuel price hike happening in the near future, the public sector oil refiners are hoping that crude prices do not spin out of control in 2010-11. Refiners still hope Crude Oil will stay at $75 in 2010-2011.
4. Bharat Petroleum Corp (BPCL) bought 1 million barrels each of Algerian and Libyan crude in a tender for oil loading in April, trade sources said on Tuesday.
5. Euro hits a high for the day at 1.3730 cable briefly breaks 1.5700 on the back of higher oil prices, now at 77.15

Tags: commodity news, crude oil, crude oil future, energy update, heating oil