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If fortune cookies carried curses as well as saccharine platitudes, surely one of the most commonly encountered would be "May you live in interesting times." Well, it is getting interesting in the oil market. Rather, interest is building in the market. Over the past week, open interest in New York Mercantile Exchange (NYMEX) light, sweet crude oil futures jumped 7% to exceed 2.5 million contracts. That represents a potential trading volume of 2.5 billion barrels of crude. Impressive as that number may be, open interest is still flagging in the wake of the oil market's cratering last year. Year-to-date, open interest is still down 16%. NYMEX Crude Oil Futures Open Interest 
The growing interest in oil futures, in large part, stems from an improvement in the economic outlook and a greater willingness on the part of investors to venture back into riskier asset classes. Bets were laid heavy on the oil market this week. The American Petroleum Institute said that the U.S. Energy Department's weekly inventory report would likely show domestic crude stockpile falling nearly 6 million barrels to 357.9 million. As it turned out, Energy Department figures showed oil inventories decreasing by 4.4 million barrels. Traders had a pretty good sense of the drawdown. July NYMEX crude oil was firm and mostly higher overnight, holding on to the week's rally, which took the nearby contract to the $70 level for the first time this year. After closing the Tuesday floor session at $70.01, the contract traded as high as $71.65 in the electronic overnight market. Throughout the week, traders acted as though oil supplies might tighten or that demand might increase. The widening contango indicates that the market is betting on more-than-adequate supplies of oil for now. At 361.6 million barrels, domestic crude oil inventories are above average for this time of year. For the week, nearby July NYMEX crude rose $1.40 a barrel. That brought crude's year-to-date gain to 57%. The three-month contango jumped 72 cents a barrel this week to $2.72. Oil analysts surveyed by Bloomberg News called for an uptick in refining activity ahead of the peak in summer gasoline demand. Oil patch watchers figured refinery utilization would tick up 0.2% to 86.5%. Some brave souls even forecast capacity utilization rising to 87.1%. Refiners didn't think stepping up production was such a good idea, though. According to the U.S. Energy Information Administration (EIA), cracking operations actually slowed down, dropping capacity utilization 0.4% to 85.9%. The bad guesses about refining activity messed up analysts' forecasts for product supplies. Oil Patch watchers banked on a build in gasoline supplies from 750,000 to 1.3 million barrels. EIA, though, reported inventories decreasing by 1.6 million barrels, putting supplies below seasonal norms. According to Street estimates, we should have seen an add of 1.4 million to 1.5 million barrels in middle distillates inventory, too. Instead, stocks of heating oil, diesel and other fuels decreased by 300,000 barrels. That still leaves plenty of fuel, though; supplies are above normal now. Dearth was plainly on traders' minds this week. Unleaded gasoline futures rose 4 cents a gallon, or 2%, outstripping the 1-cent, or 0.6%, uptick in heating oil prices. The gain in product prices, however, couldn't overcome the strength in crude oil. Overall crack spreads deteriorated this week, pushing the NYMEX-implied refining margin down to 14.9%. For the year, margins have averaged 24.5%. NYMEX-Implied Refining Margins 
Though technically overbought, crude still could make additional gains before retreating. If the July delivery extends its rally, the 38% retracement of the 2008-2009 decline at $82.38 would be the next upside target. Some consolidation at the $70 level ought to be expected before an assault on higher prices is mounted, though. Initial resistance today is at the overnight high of $71.65, while support should be found at $69.34. A close below a key retracement at $67.02 would indicate that a short-term top is in.
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