in.reuters.com :

NYMEX crude oil prices eased below $73 per barrel on Friday [21 Aug 2009], reversing an earlier surge to a 7-week high. Data on Wednesday from the EIA showed a surprise 8.4 million barrel plunge in weekly US crude inventories had buoyed sentiment. But oil's surge proved short-lived as consensus grew that this was due to a fall in imports rather than a rebound in US fuel demand.

The new NYMEX front month contract for Oct 2009 delivery was down at $72.77 a barrel (live oil prices), off a high of $73.24 earlier. Oil is on track for a 7.8% gain this week. So far, US economic signals have been mixed, with few signs of recovering fuel demand. US stocks rose for a third session after manufacturing data and a rebound in Chinese stocks reassured investors. Without a sharp slide in crude oil prices, OPEC is likely to leave its output targets unchanged when it meets on 9 Sep 2009.

In the short term, the $75 resistance level looks like a tough one to crack, especially with economic indicators being as mixed as they are, demand is not exactly going to take off any time soon. On the supply side, we've got OPEC maintaining a steady course and no outsized supply or geopolitical disruptions so far.

So what's left is to look at forex rates, the US dollar and specifically the USDX, where it remains in a trading range between 78-79, apparent double-top formation notwithstanding. Remember, a technical formation is only a formation when completed. Besides, with the Sep 2009 NYMEX crude oil contact having just expired and being rolled over to the Oct 2009 contract, barring some trigger event, one could expect a consolidation period between $70 to $75 in the meantime.

See also :

1. NYMEX crude oil prices fall below critical $60 support level
2. NYMEX crude oil prices rise above $60, snapping 3-day decline
3. NYMEX crude oil prices rise to $68 on brighter economic outlook
4. NYMEX crude oil prices hit $72.20 on rising outlook and falling dollar


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