A Bull Trend Matures as Crude Moves on to $82 following NFPs

Mar 05, 2010 (DailyFX via COMTEX) -- Scheduled event risk was generally a disappointment for those seeking out volatility; but the data, combined with the stable backdrop of advancing risk appetite, would nonetheless push crude higher. A commodity of industrialization and speculation, oil extended its recently choppy trend to test yet another prominent, even number: $82.

North American Commodity Update

Commodities - Energy

Crude Oil (LS NYMEX) - $81.92 // $1.71 // 2.13% Scheduled event risk was generally a disappointment for those seeking out volatility; but the data, combined with the stable backdrop of advancing risk appetite, would nonetheless push crude higher. A commodity of industrialization and speculation, oil extended its recently choppy trend to test yet another prominent, even number: $82. Aside from signifying the highest level for the commodity in nearly two months, this figure also has a history amongst speculators as the turning point for the October 21st peak and reversal. For technical traders, a stall and collapse from here would further a 'head-and-shoulders' formation. Otherwise, the distracted advance of the past month would not have to push much further to surmount 16-month highs at $84. Speculative interest is certainly carrying its weight when it comes to this securities appreciation. Matching general pace and bearing in the equities market, oil traders have seen their optimism fortified by the progress made towards buttressing the Greek economy and ensuring its financial troubles do not spread to the rest of the European Union and perhaps beyond. Additional austerity cuts from the government itself were a considerable gesture; but it was the nation's ability to successfully raise funds that provided investors some level of confidence. Nonetheless, fear has not yet fully dissipated. Should the market doubt the EU's resolve to lend whatever is necessary to bolster Greece or fear that troubles in Spain and Portugal could swamp effective rescue measures; the financial stability of the region could once again stoke anxiety.

For near-term speculative interest, the US labor data for February carried its own influence over this capital markets. From a speculative standpoint, the data would print close to the market's forecasts. From a purely economic standpoint, the data would offer a modest boost to growth forecasts and thereby the outlook for energy demand. In fact, many commentators believe that had February snowstorms not been a factor, the month would have shown a net increase in payrolls. Nonetheless, putting this report into context, the world's largest economy is still suffering from net job losses when the unemployment rate is already at 9.7 percent. Considering the subsequent influence this has on consumer spending, the outlook for a robust recovery that leverages energy demand is relatively mute. In the meantime, supply is still extraordinarily high. The increase in the Department of Energy's crude oil inventory figures (extending the longest series of weekly increases since May) pushed US stockpiles to its highest level since August at 341.6 million barrel. It will be difficult to work off these excessive supplies and compensate for the slack capacity at refineries and further up the supply chain. Looking forward, the OPEC meeting on the 17th could provide a better assessment of production plans from the world's largest collective supplier of petroleum productions.