May crude oil futures on Thursday rallied by around $4 a barrel to close at $52.64. Prices remain in a six-week-old uptrend on the daily bar chart and in late March hit a fresh 10-week high of $54.66 a barrel. That price level is now stiff overhead technical resistance. A close above $54.66 in May crude oil futures would be a significantly bullish clue to suggest a challenge of the January high of $58.31 a barrel or higher in the near term.

From the crude oil market bears' perspective, they need to produce a close below strong chart support at this week's low of $47.26 a barrel, basis May futures, to negate the aforementioned price uptrend on the daily chart and to also suggest a near-term market top is in place.

Market fundamentals in the crude oil market cannot be considered bullish, however. On Thursday the International Energy Agency said it will likely lower its oil demand forecast for 2009. Also, liquid energy storage data this week showed the highest crude oil stocks in 16 years, while U.S. oil demand in the latest four weeks was the weakest since October of last year. The worldwide economic slump continues to dampen demand for energy.

However, crude oil traders appear to have already factored into the futures price structure the weak worldwide economic fundamentals and instead are focusing more on the recent solid rallies in the U.S. equities market. Veteran traders know that history shows the stock market tends to bottom out and start to recover several months before an economic recession ends.

FutureSource.com and TradingEducation.com