Crude Oil Sets Fresh 2010 High - Déjà Vu Around The Corner?

Crude oil prices rose quietly to a fresh high for 2010 today, peaking at USD84.62/barrel in mid morning trade. That's it's best levels in eighteen months.

A suddenly weaker dollar and strong demand from China seems to be what many of the newswires are citing as the reason for today's rise. US non-farm payrolls data for March is due out on Friday, despite the holiday. Ideas are that payrolls will have risen for only the second time since the global recession began. That might boost confidence that the worst is over and US demand for crude will now start to increase.

Nevertheless, it's a pretty impressive performance from crude, in the wake of yesterdays bearish stocks data from the US Energy Dept. US crude stocks rose by almost 3 million barrels, making a 10 million barrel increase in the last fortnight alone. Gasoline inventories also rose when a 2 million barrel drop had been forecast, yet still prices go up.

"Markets that rise on bearish news are impressive enough, but markets that rise on overtly bearish news are truly impressive. This is one such market," said the highly regarded Dennis Gartman earlier this week.

How right he is. What will the market do when we get some overtly bullish news like an escalation of tensions in the Middle East? Or more terrorist attacks on pipelines in Nigeria?

I suspect that there might be some fund money flowing stealthily back into the crude oil market again. And we all know what trouble jumping on that particular bandwagon caused last time.

Is crude set to be the BIG story of 2010? I wouldn't be at all surprised.