Crude oil climbed to the highest price in a week as the IMF bolstered its economic outlook and a decline in U.S. crude inventories added to signs of recovery. U.S. crude stockpiles fell 2 percent to 351.8 million barrels last week, the biggest reduction since September, the American Petroleum Institute reported. The Energy Department will release its own weekly data today. The International Monetary Fund raised its forecast for global growth this year, reflecting a stronger-than-expected first half.

Weekly:

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Monthly:

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Technical Outlook:

Aug Crude Oil: Crude prices shot up to the 7500 area on short covering with momentum accelerating above the 7300 mark as trade reversed the short term downtrend. The market settled at 7407, above yesterday’s XXX Resistance with overnight action firmly higher and a Bullish outlook for today.

Heading into the primary session, we may see some mild profit taking if trade struggles above 7500, however, initial pullbacks will offer buying opportunities. Look for the weekly Pivot at 7440 X Support to hold for a low risk play. Otherwise, wait to buy into the 7407-7385 XX Support zone with a suggested Stop below 7375 area for continued testing of the 7500 area. Trade above 7510 overnight highs looks to extend rallies to 7540-7550 XX up to 7600-7650 XXX Resistance targets.

On the downside, any shorts coming into the pit session against the 7500 level can use a new high Stop above 7510. Use 7440 X and 7407-7385 XX for profit objectives on shorts. Trade below 7385 alerts for secondary round of profit taking to kick in targeting 7350-7300 XXX Pivot Support zone. All shorts should cover at XXX and if we hold there, buyers can re-enter the market. Trade or a close below 7300 is Bearish and guns for 7250-7200 XXXX extension range and lower in the days ahead.

Bullish Factors:

(1) the weaker dollar, (2) the rally in the stock market which improves confidence in the economic outlook and energy demand, (3) the action by the US Energy Department to raise its outlook for global oil consumption this year to 85.82 million barrels a day from a June forecast of 85.51 million barrels a day, and (4) the outlook for weekly crude oil supplies to decline when they are released by the DOE on Thursday.

Bearish Factors:

(1) the action by the US Energy Department to cut its 2010 crude oil price forecast to $78.69 a barrel from $78.75 a barrel a month ago, and (2) the unexpected decline in May German factory orders, which heightens concern that the European sovereign-debt crisis may be starting to slow the European economy and fuel demand.

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