Oil inter-market: Rise in S&P 500 points to a further up-move towards $49.70

Although WTI crude oil prices seem to have stagnated below $50.00/barrel psychological mark, it has still maintained a high degree of correlation with the broader US equity index, S&P 500. 

On Friday, the black gold found a balance area around $49.25-30 area, just before the release of official job numbers from the US. Immediately after the disappointing release, the commodity dropped sharply below $48.50 alongside the fall in US benchmark equity indices. 

The fall in commodity was accompanied by a sharp fall in the US Dollar and in the long-term US treasury yields (30-yrs). At the same time, fear index, VX, surged higher, triggering a risk-off trade in the commodity. The commodity, however, managed to recovery as US equity markets staged recovery from lower levels and as the fear index turned lower.

Monday's up-move is again supported by a minor up-tick in the broader US S&P 500 index futures and an accompanied downslide in the fear index. Meanwhile, flattening US 30-yr treasury yield and the overall US Dollar strength, as measured by the US Dollar index, have failed to provide any direction to commodity.

Going forward, oil prices will continue to derive its intrinsic from the ongoing up-move in S&P 500 that justifies further up-move for the commodity towards its next major resistance near $49.65-70.