Higher Crude? Not so Fast (USO)

June 27, 2012 11:24 AM EDT
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Crude oil is trading back above $80 per barrel, but the move higher could be short lived as bears move in for the kill armed with inventory data that came in higher than expected with a decline of 133k vs. a decline of 500K barrels expected.

Today's early rally in crude was linked to positive data for goods considered durable, which came in higher than expected. This had many investors thinking the economy in the U.S. might not be as lousy as previously thought, and as a result oil traded higher.

A little later, following the inventory data bears stepped back into the market at just under $81 per barrel, pushing it back down to 80.20.

At this point, there doesn't seem to be a huge impulse for traders to go long, but if profit taking really heats up, a rally is almost certainly in the cards.

In other oil news, Venezuelan Officials today proposed that OPEC set an oil price band on oil between $80 to $120 per barrel. According to a Reuters report, OPEC slapped a price band on oil in 2000 setting a range of $22 to $28. The band required members to cut or raise output in an effort to keep prices in that range. The policy was a failure.

Another OPEC official quickly dismissed Venezuela’s idea saying it was "out of the question."

United States Oil Fund LP ETF (NYSE: USO) trades at 30 currently. WTI futures are at $80.13.

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