Weekly Crude Oil Report: Higher Still?
Source: Resource Investor, Jeremy Ascher (5/4/09)
". . .fundamentals and technicals favor a continuation of the recent bull run in crude oil."
Adding fuel to the fire was strength in the equity markets on a bullish consumer sentiment report and on further indications that key OPEC members are in favor additional productions cuts at the cartel's upcoming meeting later this month. Technical drivers behind the rebound were a break of both the 6-week and 3-month downtrend lines and the Bulls ability to maintain settlements throughout the week above the 5000 level.
Moving on to a new week, the fundamentals appear to be somewhat favoring the Bull camp, at least in the near term, despite the continued rise in inventories. As a new month begins as well, the current technical picture is bullish based last week's Bull upturn above the 6-week and 3-month downtrends and the beginning of a new 4-month uptrend line (4 M ^ TL) at 4900 coming from the 2009 lows at the 3300 area.
The expectation this week is for a challenge of the 2009 high at 5466 up to 5500 resistance with a 'buy dips' bias on corrective dips into the 5200-4900 weekly Support range. Pullbacks are expected to hold this range with good buying opportunities at 5200-5050 and major buying opportunities against the 4 M ^ TL at 4900.
Taking a look at the downside, only a close below 4900 will void the current Bull Run that could potentially send the market tumbling back to last week's low at 4800. Additional concerns on the downside would come if we test and hold the 4 M ^ TL at 4900, but fail to reclaim the 5000 mark suggesting momentum loss for the Bulls.