Will Crude Collapses Soon ?

 
Fundamentals

Crude Oil futures are lower for the second consecutive session after release of inventory and employment data. Inventory data shows US Crude Oil stocks at their highest levels since 1990, however gasoline inventories did see a significant drawdown of 2 million barrels. Crude Oil inventories at Cushing have risen 13 of the past 15 weeks. The disappointing ADP job figures yesterday set a negative tone going into today's claim data, and although there have not been many official revisions to non-farm estimates, some traders may be looking for softer numbers than previously expected. A weak non-farm number could send prices tumbling even further, as rising US inventory levels and a weak labor market may simply be too much for bulls to overcome.

Technical Notes

Turning to the chart, we see that the June Crude Oil contract broke the 50-day moving average and reversed sharply yesterday. The recent closes back above the relative high close at 103.22, which can be seen as previous support, were seen as possible evidence of a false downside breakout. If prices are unable to hold this level, the recent up-move appears to be more of a dead cat bounce. Ideally, bears would like to see prices dip below the pivotal psychological support level at 100. The oscillators are giving fairly neutral readings, suggesting some traders may wish to keep their focus on chart developments.