BARGAIN BELOW, BUST ABOVE

Crude oil has backed off to unchanged after several sessions of solid gains and after being up strongly overnight. Participants clearly do not want to go into a weekend with any significant length.

Validity over sustainable recovery is still the fulcrum on which the entire directional debate rests. Up to $76, it appears easier to affirm, than above that mark. A growing body of supportive economic data would be helpful, but it is mixed.

In the UK, PPI slipped for the first time since November 2008. However, persistent overshoot of headline CPI and VAT hike will continue to be a headache for policymakers in making a balance in containing inflation and boosting the economic growth necessary for rising energy prices.

Still considering the outsized fall in crude oil inventories prices should have tested much higher, leading us to believe thast there is much more inherent weakness than current price action implies.

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