A further deterioration in the future outlook of Western economies continues to undermine the closely linked equity and energy markets. It has been argued that competing pressures have resulted in the range-bound energy market which we've all been sitting in as of late. However, one is hard-pressed to find a solid bullish indicator other than USGC hurricane buying. Granted, technical support from several major stock indices is providing hope of further upside for the bulls, but this type of prop can disappear very quickly.

Take, for instance, the recent drop in crude oil Open Interest - a strong sign that the recent market strength was the result of short-covering rather than new buyer positioning. Thus, the rally may in fact prove to be short-lived.  

However, do not expect too much of a move in the opposite direction as most markets remain supported above key buying levels. The Asian fuel oil market in particular, has been defying a number of analysts observations of a bloated storage sector and continues to exhibit strength. WTI crude oil persists in trading around $77 despite the latest EIA report showing larger than expected builds in both crude and products.

Instead of trying to fight the market, consumer hedgers may wish to lock in protection against further upside moves while still being able to enjoy the benefit of a correction lower. For instance, the Singapore Fuel Oil 180cst 4Q10-1Q11 $475/525 call spread can be owned for zero premium by accepting a leveraged price floor at around $335. This hedge allows for $50/month of upside protection in every month from Oct-10 through March-11 with no premium at risk at or above $335.