Crude oil prices finished strong for the week ended March 6, though started off under pressure due to several factors including a surge in the dollar to a 2-3/4 year high and continued concern the worldwide recession is deepening and will further curtail energy demand. Despite the early weakness and attempts to breakdown below the 4000 benchmark, the Bulls came roaring back as crude inventories unexpectedly dropped by 757,000 bbl versus expected builds of 1.0 million bbl and as US gasoline demand rose 2.2% to 9.2 million bpd marking the second straight weekly increase. Friday’s unemployment figure rose to at 25 year high sending the dollar tumbling while giving an additional boost to oil. In the end, crude oil spiked to a five week high at 4630 on Friday, closing the week at 4552.

As we begin a new week, from the fundamental side, traders will be focused on this week’s inventory report and the upcoming OPEC meeting on March 15. The inventory data has mainly been showing large builds for 2009, but if the more recent ‘surprise’ draws continue, we’ll expect to see higher prices prevail. On the OPEC meeting, signals have been mixed as production cuts appear to be working thus far, so traders will need to pay close attention to any comments from OPEC members as the week progresses.

Moving on to the technicals, the macro picture shows sideways consolidation within the overall bear trend for most of 2009 from 5000 to 3300. However, zooming in on more recent action, we are in a three week uptrend with prices rapidly approaching weekly Resistance at 4700-5000. Building on last week’s strength, we can take a ‘buy dips’ approach against initial weekly Support at 4550-4350. Any pullbacks holding this range will set the stage to target the 4700-5000 range with key profit objectives at 4700, 4825-4860, and then 5000-5047. Follow through above the 2009 high at 5047 sets a new objective at the Dec 2008 high at 5462 for the coming weeks.

On the bearish side, a downturn below 4345 indicates short term weakness with the expectation of triggering drives back into the 4200-4000 range. However, only price action falling below 4000 will intensify bearish activity with an alert to sell any failed rebound attempts against 4100-4200. Producing settlements below 4000 confirms bearish control setting a target range at 3800-3700 for this week and further deterioration to 3500-3250 in the weeks ahead.