Crude

The key observation today is crude oil which is attempting to break out to new highs. A close above 82 would be resolutely bullish. Given recent price action and the lack of any resistance is seems the market is bound to break out to the upside. However it is worth noting that, until the spike that occurred around inventory releases, we had a possible evening star formation which would be validated if crude closes below 80.63. We therefore have a very tradable reversal/break-out market in place. A retracement should take us back to at least $75, while on the upside I see 96 as the next extension of the rally with intermediary resistance at $87.20 marked by the topside of the channel. - Nic Lenoir

Sadly, media misfeasance (or malfeasance) has become such a common experience that it begins to look like a go-to story on Zero Hedge during slow news cycles. All we can say is that despite its increasingly droll repetition, we think media degradation in all its forms an important issue. So when, just for instance, the mainstream media jumps all over the Iranian "invasion" of Iraq to seize oil wells, despite the fact that the seizure of the well itself is only one of a rather unremarkable series of similar incidents in exactly the same disputed area going back years, and at the same time totally ignores the much more serious news of terrorist attacks on Iraqi pipelines that actually halt about 400,000 barrels per day of crude flow, well, we are just not that surprised anymore. One has to go to Alsumaria, Iraq's satellite channel, to find this story today.

Examining today's sell-off in Gold, Silver and Crude Oil and the concurrent rally of the US Dollar Index across daily and 1-minute charts

Last Friday, U.S. crude oil futures finished above $78, the highest level in a year, even though the U.S. continues to sit on ample supply of petroleum. Some analysts said a sudden upward spike was still unlikely, while others are predicting an immanent correction down below $70. However, if you take a closer look, it is evident that the current crude oil market is almost entirely detached from fundamentals. Furthermore, there are several factors supporting oil rising to new levels, as fundamentals are out the window in the near to medium term.

Crude supplies continue to accumulate as the demand picture continues to deteriorate.

Curious note: the US Oil Fund, which is an ETF, holds 20% of the outstanding March futures contracts, and these have to roll by the end of NYMEX trading today from March to April. The ETF holds 81,050 March contracts as of February 5 according to its website, which is 4x the amount it held in December. It is possible that the 1-2nd months contango could exhibit some very odd behavior today as USO rolls. The only way the contango won't explode is if there are buyers on the other side of the trade.