Crude oil got a reminder that hurricane season is just getting started when Tropical Storm Alex formed late last week. Though prices have sold off over the last two session, the larger trend has been strongly to the upside. Global economic concerns remain a wildcard. Crude oil is currently down after losing 0.61% on Monday. It is important not to make too much of Monday’s price action, for it was simply profit taking after an extremely strong rally. In the bigger picture, crude oil has been strong both in nominal terms, having rallied from $64 to almost $80, and in relative terms, having outperformed stock markets which find themselves still close to recent lows. With Tropical Storm Alex currently heading toward the Texas-Mexico border, another bullish underpinning is added to the crude oil bull thesis—potential supply disruptions from an active hurricane season. Granted, this particular storm will have no significant impact, but forecasters have been calling for an extremely active season, and Alex is just a reminder of that. Moreover, with the BP oil leak situation still unresolved, production out of the Gulf of Mexico is in an extremely precarious state. Nevertheless, if stock markets fall steeply from here over global economic concerns, the spillover into crude oil could be swift and brutal. These are by no means calm markets. Resistance is at the psychological $80 level, while initial support can be found at $75.50.

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