Saturday, October 9, 2010
Dian L. Chu: Next Major Resistance $87 a Barrel
After the jobs report came in within expectations, there was substantial fund buying back in all the commodities across the board with the thought that the still weak job market mandates the Fed to start the QE2 Program in a serious manner.
So, Crude basically went from $76 a barrel to $84, as it was under subscribed by fund managers at the $76 level before the product`s inventory levels started to show declines due to lower refinery utilization rates and a pickup in demand on the Distillate side.
The pending jobs report supplied the expected pullback, and now Oil is trading at just below the $83 level. It should test $85 before Wednesday of the upcoming trading week, as the rush back into commodities after the jobs report indicates that this inflation trade still has some major support and legs by investors.
If Crude breaks $79 to the downside then obviously the risk trade is being taken off by investors.....See Dian's Crude Oil Technical Charts.