NO WHERE NEAR OUT OF THE WOODS

Yesterday's positive housing data allowed oil to retain most of the recent gains and the market continues to hover near recent highs. Lingering at these levels without pushing through will make the market appear oversold and start another round of long liquidation.

This Friday's Commitments report will be measured from today. The higher, tighter range has now become 78.40-79.30, a break above which may generate enough momentum to trigger stops thought to be near 79.60. Most look for builds to crude and draws of refined product stocks in tonight's and tomorrow's reports.

In fact, crude oil inventories probably fell to a four-month low last week as imports declined and Tropical Storm Bonnie disrupted production. One well-known house says that futures prices are “significantly” below the level warranted by “fundamentals,” offering buying opportunities for this year and next.

While this may prove very prescient, it is hard to climb on board this particular band wagon with millions still unemployed, industrial production stagnant and a declining CPI. But policymakers still have promises to keep and miles to go before they sleep.

source: