This morning's crude oil inventory report showed a bigger than expected drawdown of 3.96 million barrels compared to expectations of 2 million barrels. Let's notice that although NYMEX oil remains up for the third consecutive session, today's high at 90.23 has not exceeded yesterday's high of 90.48 -- despite the bullish inventory news.

That's the first warning signal that the 8.8% climb in oil prices since Tuesday morning is stalling.

That said, at this juncture, only a decline that breaks and sustains beneath 88.60 will trigger initial sell signals that indicate the upmove from 83.20 is complete and that the dominant downtrend in oil -- and the U.S. Oil Fund ETF (USO) -- is reasserting itself.

By Mike Paulenoff

Mike Paulenoff is author of MPTrader.com (www.mptrader.com), a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions.

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