International Forex Inforamtion

Story By:
Chartwhiz.com

Crude oil prices rallied early last week to new 2009 highs at $73.38 on dollar weakness and an attack on an oil pipeline by Nigerian militants, but failed to hold on to gains as the end of the 2nd Quarter ignited profit taking while a slew of bearish reports reversed momentum for the remainder of the week. Crude oil settled lower for the 3rd straight week at $66.73, down $2.43 from the prior week.

With oil rallying 41% for the 2nd quarter, it was not surprising for profit taking to come in. But the real story last week was a turn in the fundamentals. For starters, consumer confidence set the bear tone, falling to 49.3 in June, down from 54.8 in May as consumers grew more pessimistic about an economic recovery. This came as a surprise as analysts were expecting to see a rise to 55.5. The weekly inventory report added pressure to oil prices as supplies at Cushing rose 200,000 barrels to 28.6 million while gasoline and distillates posted larger-than-expected builds as demand for the products remains weak. To top things off, a disappointing jobs report sent the market tumbling to close the shortended week with 467,000 jobs lost in June vs. an expected loss of 325,000 jobs, a clear indication the economy is not yet improving. Additional selling came as traders sqaured off positions ahead of the long 4th of July holiday weekend.

The ‘fundamental reality’ appears to have set in as the 2nd half of 2009 begins and substantial evidence of an economic recovery is non-existent. The technicals gave us a heads up 2-weeks ago on the break of the major 10-week uptrend line while last week’s ‘double top’ rejection at the 2009 highs provides decisive evidence a correction is underway. The Bulls will continue to watch for dollar weakness and geo-political tensions to keep prices high, however, with lack of support from the fundamentals, rallies will likely be short lived.