Pressure on Oil - Market Analysis for Jun 8th, 2007

Oil prices and the US Oil Trust (AMEX: USO) apparently are not immune to the shocking surge in longer-term interest rates. That said, my pattern work since the 5/31 low at 47.59 into yesterday's new recovery high at 51.24 exhibits very bullish form, which suggests to me that regardless of the spike in longer-term rates, the USO was destined to pull back after its 6-session, 7.7% vertical upmove. Now, whether the current pullback will be deeper than expected because of the pressure from rising interest rates, we will have to see. However, as of right now, I am expecting weakness into the 49.50-49 area prior to the start of the next upleg, within a larger, constructive pattern off of the January low at 42.56.