Crude futures stabilized yesterday on minimal volume as they took a breather from impressive gains.  The futures are attempting to position themselves for a rally today as they realize April highs suddenly aren’t so far away.  Meanwhile, crude should exhibit a positive correlation with U.S. equities until tomorrow’s weekly inventory release. 

However, crude could log a slight pullback today towards our 3rd tier downtrend line as U.S. equities struggle with the critical 900 level.  Additionally, yesterday’s weak volume is a signal that we could see some near-term negativity.  Regardless of near-term activity, crude has made statement after statement concerning a commitment to its uptrend.  The last tests seem to be our 3rd tier uptrend line and April highs.  If crude can climb above these two obstacles, its gains could really accelerate.  Meanwhile, a drop beneath our 3rd tier downtrend line could result in sharp near-term losses.  

Volatility should pick up by tomorrow with the U.S. releasing its ADP Non-Farm Employment Change data followed by weekly inventories.  Crude inventories continue to come in far above analyst expectations, but the rise in supply doesn’t seem to bother investors as they hone in on a global economic recovery. Appreciation of the Pound and Euro should help international crude demand for the dollar denominated commodity.  Additionally, improvements in production and consumption data points around the globe are very encouraging signs for crude’s uptrend.    

Fundamentally, we find supports of $53.97/bbl, $53.63/bbl, $53.19/bbl, $52.80/bbl, and $52.29/bbl.  To the topside, we see resistances of $54.34/bbl, $54.77/bbl, $55.24/bbl, $55.58/bbl, and $55.94/bbl.  $50/bbl turns becomes a key psychological cushion again while $55/bbl serves as a psychological cushion.  Crude is presently trading at $54.00/bbl.

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