Crude Oil (WTI) – $75.17 // $0.00 // 0.00%

Commentary: Crude oil will attempt to build upon last week’s three-day rally that saw the commodity bounce from a low of $70.76 to $75.59. But, as much of that rally can be attributed to oversold conditions, it will be difficult to repeat such performance, especially given that the U.S. economic outlook remains extremely challenging in the near-term. While Fed Chairman Ben Bernanke’s pledge on Friday to restart the central bank’s quantitative easing program if needed is supportive of financial markets, the coming plethora of economic data will likely be more influential in determining the direction of risk assets. This week features many important releases such as Personal Income (0.3% expected) and Spending (0.3% expected) data on Monday; the Conference Board’s measure of Consumer Confidence on Tuesday (50.9 expected); the ISM Index on Wednesday (52.8 expected); Factory Orders on Thursday (0.4% expected), and Nonfarm payrolls on Friday (-100K expected). The key concern for both crude oil and equities remains to what extent the U.S. economy is set to slow in the coming quarters, and whether the world’s largest economy will enter a double dip recession.

Technical Outlook: Prices continued higher after showing a Piercing Line bullish reversal candlestick formation above support at $73.66, the 76.4% Fibonacci retracement of the 5/19-8/4 rally, taking out the 61.8% Fib at $73.66 to challenge the 50% mark at $75.43. This is reinforced by the lower boundary of a broken rising channel set from the May bottom (now at $76.00). A move above that sees resistance at $77.21, the 38.2% retracement level.

Tags | bounce, economic outlook, fibonacci, oversold, piercing line, rally