The crude oil market extended its gains on Wednesday following a larger-than-forecast decline in crude inventories as refineries increased operating rates. Supplies of crude fell over 2.8 million barrels last week, far above the 2.1 million barrel forecast.

On the other hand, gasoline supplies climbed by 1.44 million barrels, or about double the 775,000 barrel build that was forecast. What do these numbers tell us?

I believe the gasoline numbers are indicative of how the economy is doing in real time. Clearly the American consumer is feeling the pinch from higher unemployment and a host of other factors. People simply are not traveling as much, or even driving as much for that matter.

The draw on crude inventories is a result of refining rates being at the highest level since last August. The big story of today though is the rally in crude. A lot of pundits blamed the possibility of CFTC position limits in the energies futures markets for crude's recent dramatic decline.

I think though that this really just masked the true underlying concern, which is the economic backdrop. The state of the economy, above all else, will be the primary driver for crude in the coming months. We have seen a strong correlation between crude prices and equities over the last few weeks, and it looks like for now the crude oil market has been able to stop the bleeding.

As earnings season has kicked off, the market has had some pleasant surprises. The likes of Goldman Sachs ( GS) coming out with better-than-expected numbers, as well as the tech bellwether Intel ( INTC) catching the market off guard with its upbeat outlook, has once again inflated equities with economic optimism.

The S&P 500 is trading above its 200-day and 50-day moving averages. This would indicate that further strength is a strong possibility. Clearly the market likes what it has seen thus far into earnings season. Add to this mix the improvement seen in manufacturing data this morning, and the bulls have a lot of ammunition to drive not only oil, but equities higher as well in the near term.

I do feel however, that crude oil will most likely remain range bound for some time to come barring any geopolitical events and outside forces of that nature. I think that fundamentally the market can justify prices in the $60 per barrel range, but any runs considerably higher at this point would be premature and unsustainable.

Although the economy may in fact be on the mend, it is likely to be a long, drawn-out recovery. This economic reality was reiterated in today's Fed minutes release. Likewise with the S&P, I feel that although we may see additional gains in the short term, I think any moves toward the 1000 level will be met with strong resistance and will likely fail.

Being an option seller, I think that both of these markets will possibly present some good call-selling opportunities in the near future.

Matt Zeman is a principal with Lasalle Futures Group and chief market strategist for Time Means Money.Com.

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