Minor Recovery Bounce in Crude

Purely from a near-term technical perspective, today's geo-political "strength" in crude oil and its ETF the US Oil Trust (AMEX: USO) has the look of a minor recovery bounce rather than the start of a new upleg in the aftermath of the $6 and 5.5% decline since the July 2 high of 117.94 in the USO (to yesterday's reaction low at $111.63). If the upmove does turn out to be "just a bounce," then we should expect the USO to head still lower into a full-fledged test of its 15-month support line, now at 108.80. The inability of oil prices to climb in reaction to big drawdown inventories this morning suggests strongly that prices are in the grasp of a significant downside correction that is not yet complete.