Crude oil futures for delivery in April 15 [CLJ15.NYM] surged 4.33% on Wednesday to an intraday high of U.S. $45.34 per barrel on light volume and closed at U.S. $44.66 per barrel on the New York Mercantile Exchange (NYMEX). The U.S. Dollar index (DXY), which is a weighted geometric index of the value of the U.S. dollar relative to a basket of six major currencies and inversely correlated with the crude oil prices, tumbled 5.19% to an intraday low of 94.765 before bouncing back and closed at 98.781.

Currency traders, who were piling their bullish bets on the dollar, decided to take profits after U.S. Federal Reserve Chair Janet Yellen said that the Fed is no longer patient about hike rates. The markets seemed not to get any direction from the Fed as Yellen also said, "Just because we removed the word patient from the (monetary) statement doesn't mean we are going to be impatient".

The Fed, however, stood by the statement that the interest rate hike decision will be determined "on a meeting-by-meeting” basis, depending if they are "reasonably confident" that inflation will pick up towards the Fed's annual 2.0% target.

The crude oil markets shrugged off the U.S. Energy Information Administration (EIA) weekly report early Wednesday, showing that crude oil inventories had a build of 9.622 million barrels to a total of 458.51 million barrels, the highest since the EIA began keeping a weekly record. Analysts had expected a build of about 3.75 million barrels.

On Tuesday, the American Petroleum Institute (API) reported that the Cushing, Oklahoma, stocks increased again by 2.865 million barrels to a new all-time record high of 54.4 million barrels. Capacity is about 67% full in Cushing, Oklahoma, the delivery point for West Texas Intermediate crude oil futures contracts, compared with 50% at this point last year, said the EIA. The EIA warned that the U.S. may run out of crude oil storage space as soon as June.

The Crude Oil Volatility Index (OVX), traded on the Chicago Board Options Exchange (CBOE), nose dived 10.36% on Wednesday to close at 53.65. The OVX is a crude oil derivative which measures the market’s expectation of 30-day volatility of the United States Oil Fund ETF [NYSE:USO], primarily the near month WTI crude oil futures contracts traded on the NYMEX. In short, high OVX readings usually mean traders see significant risks that crude oil price futures will move sharply lower.

As of March 10, there are 495,142 long positions of non-commercial contracts of crude oil futures, traded by large speculators, traders and hedge funds, a decrease of about 2,806 long positions week-on-week, according to the Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) each Friday. This is compared to about 234,483 short positions, an increase of about 1,176 short positions week-on-week where light sweet crude oil contracts are traded in units of 1,000 barrels.

From the technical viewpoint, crude oil prices could be trading sideways, between U.S. $48.64 per barrel and U.S. $43.58 per barrel, as hedge funds and crude oil speculators are still betting on a major DXY pullback.

The odds that crude oil prices could take another leg down, however, still exist as long as the OVX is still moving in the range between 58.74 and 48.16, or between 50% and 38.2% Fibonacci retracement levels. The next support for crude oil prices will be at U.S. $40 per barrel, if the crude oil price decides to pull back further.