Crude oil futures are still reeling from last week’s massive crude oil build and another jump in U.S. rig counts. It was a double eight as oil rigs increased by eight and the eighth week in a row that the rig count has risen. What is interesting though is that there we were no rigs added in Texas and New Mexico and the biggest increase in rigs last week was in Louisiana which makes one wonder if we may see a slowdown in adding rigs. Still, the number of rigs put us back to September 2015 levels but still way down from historical highs.

Regardless, there are real concerns whether OPEC can keep it together. Saudi Arabia has said they can’t carry the load forever and is looking at OPEC and non-OPEC nations to carry some weight. Yet in the meantime, with demand rising, the current supply glut may dissipate as we start to see refiners come out of maintenance and as we see the delayed impact of OPEC production cuts.

If oil is going to recover, it may need some help from the Fed and inventory. The Fed is widely expected to raise interest rates this week and the deciding factor for the oil market may be what they signal for the future. The Fed statement after the rate increase will be key to see just how fast the Fed believes they must raise rates before the economy overheats. What is the plot or the timing that the Fed will get rates back to normal will be key because of its impact on the dollar.

But it is not just the Fed but Europe as well. ECB chair Mario Draghi will also be talking and perhaps laying out a plan for the European Central Bank to start tapering off its quantitative easing measures. How that impacts the euro versus the dollar will be key because a major headwind for oil has been the dollar, not to mention record U.S. crude oil supply.

From a long-term perspective, we still believe oil prices are headed higher but in the short term, we are still signaling technically a larger break. And $44.00 may be that target even as we are getting oversold indicators on our chart. To negate the downside breakout, oil needs to close above $50.00 or there may be more selling after a relief rally.