Crude Oil Closes Lower Despite a Surprising Decline in Supplies

Since reaching a high of just over $110 a barrel, this market has fallen back and moved sideways. We view the current action as positive longer term to drive crude oil prices up to the $120-$125 levels. A close this week over the $108.20 level should be viewed as extremely positive for this commodity.

We continue to like the chart formation which we believe will eventually push this market higher until early April. We are looking for crude oil to make its highs probably somewhere in the April May period. With a Score of -55, this commodity is in a trading range. With our monthly Trade Triangle in a positive mode, we expect to see further gains in crude oil. Long term traders should be long this market with appropriate money management stops.

April crude oil closed lower on Wednesday due to profit taking despite a surprising decline in domestic supplies. The low range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI have turned bullish despite today's setback signaling that sideways to higher prices are possible near term.

If April renews this winter's rally, the 2011 high crossing at 114.09 is the next upside target. Closes below last Thursday's crossing at 103.78 are needed to confirm that a short term top has been posted. First resistance is this month's high crossing at 110.55. Second resistance is the 2011 high crossing at 114.09. First support is last Thursday's low crossing at 103.78. Second support is the reaction low crossing at 97.73.

Check out our latest Video, Market Analysis and Forecast for the Dollar, Crude Oil, Gold, Silver, and the SP500