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Crude oil traded at $80.48 a barrel on Thursday morning, representing a 2% loss on the week.
 
The commodity weakened as warnings of an imminent recession in Europe led investors to speculate that demand for oil will continue to weaken. However, an unexpectedly bullish report from the Energy Department provided crude oil with a reprieve after unveiling a 4.68 million barrel drawdown in stockpiles last week. That compares with expectations for a 1.5 million barrel rise. Stockpiles at Cushing Oklahoma, the delivery point for West Texas Intermediate, fell by 831,000 barrels to 30.1 million, the lowest level since March 2010. A decline in stockpiles is viewed as an indication that demand is strengthening. The report from the Energy Department took the market by surprise, although in the greater scheme of things one week of positive data is not sufficient to justify a reversal in the bearish trend we have witnessed over the past five months.
 
It is worth pointing out that the weekly and monthly charts continue to support a bearish trend in oil prices and that a recent research note by Bank of America revealed that global oil refinery additions will outpace demand growth next year. At the same time I would like to remind you that Libyan oil production is resuming much sooner than anticipated and that growth in China has continued to show signs of deceleration. Nevertheless, I do not rule out the possibility of seeing a short-term rebound. The standard Moving Average Convergence Divergence indicator (MACD) is pushing very close to a bullish crossover and investors may view the recent sell-off as an opportunity to get back into markets on the hope that new stimulus measures and monetary easing by the ECB will lessen the risk element. This would naturally provide a temporary boost to risk appetite.