[BillPaay]

Friday saw crude pull-back $2.65 after it failed to make headway at the $72.50 resistance area. It was a painful day for traders and many who were short got stopped out as it got through the important $72.50 resistance that held all week, reached a high of $72.90 then proceeded to breakdown through the 8- and 34-day m.a. support levels. A stronger dollar was the main cause for the crude sell-off as the EURUSD had difficulty convincingly getting through the 1.46 level. This morning, crude is printing 80 cents lower from close. The complex is looking pretty vulnerable and analysts are looking for the 100-day m.a. to hold at $68.10 (for the continuous contract, $67.58 for the October contract), otherwise crude will be revisiting the $64.50 level followed by the $60 level rather soon. We have WTI option expiry on Thursday and as many traders have sold $60 could see many scrambling to clean up their positions if we indeed break this $67-68 level. In the meantime, crude down to $67 presents a good buying opportunity with a stop just below. Upside targets are $70.33, followed by last week's high of $72.90. With little out today in the way of fundamental oil news or economic data, crude will be tracking exogenous variables once again, primarily the dollar.

[BillPaay]

Crude traded in a tight range yesterday as even a weakening dollar failed to prop it up over the $69.50 level. Today we are looking for crude remain range bound ($68-70), taking its cue from the dollar ahead of inventory numbers later today. Reuters expectations are for a 2.7mm draw in crude, a 1.5mm build in distillates, and a 0.8mm build in gasoline. Product numbers will be key - we are entering a seasonally low energy demand period and further builds to already high inventory numbers will only weaken the complex further. The key support level we are looking for WTI to hold remains the 100-day m.a. at $68.25. Of all the products in the complex, only WTI is above its 100-day m.a. RBOB is currently testing it and HO, Gas Oil, and Brent are decisively below it. If WTI were to breakdown through this level, the next key level to hold would be $67. If the complex falls apart and we get through $67, the next target to the downside will be $64.50, followed by $60-61. First resistance level comes in at the 8-day m.a. at $69.66 followed by 34-day m.a. at $71.10. Crude will need a major boost from either the dollar or bullish inventories to get back over $70. October Brent expiry today.