ALERT: OIL OFF AS OPEC ASSURES ON SUPPLY. US EYEING SPR RELEASE.
 
PETROLEUM MARKETS

With the US threatening an SPR release and OPEC assurances that it has made up Libyan losses, prices retreated from the almost $7.00 high yesterday. Paring some gains also makes the slope of the recent rise look more realistic, as well. Make no mistake though, Libya appears to be in a protracted civil war. The Qaddafi camp has made some overtures about leaving the country requesting safe passage for himself, his family and his wealth. The rebels rejected it out of hand. Noted economists have expressed doubts that the fragile recovery can withstand sustained oil prices at these levels or higher. Don't forget that as the rest of OPEC makes up for Libya's lost production, spare productive capacity also disappears. While no extraordinary meeting is scheduled, for now, prices above $100 will be difficult to sustain without attendant demand destruction, eventually.
 
 
TECH TALK

Yesterday's new high, and the subsequent retreat would have drawn a lot more attention if there was a lower close, but the market managed to keep a little over $1.00 of the day's gains. There is still an official buy signal, with prices above the major moving averages. The market now looks to be starting a consolidation phase, with no new ground being covered, so far today. A break of today's low will open a challenge to 102.00 and 100.00 quickly.
 

NATURAL GAS

Despite the consistently poor fundamentals of oversupply, constricted demand and coming milder weather market participants are still unable to push gas well into a support zone. After falling to 3.731 on two consecutive day's the market erased those losses and now appears ready to push above 4.00 again. Still, speculators' positions slipped for a fifth week, to a net-short position of 18,581 as of March 1, the recent Commitments report, issued on March 4th showed. Stockpiles have been at a deficit to the five-year average since Feb. 4. They may total 1.651 Tcf at the end of the heating season, down from 1.662 a year earlier. Apparently, market participants think gas may not get much cheaper despite several attempts to push lower. Look for consolidation then between 3.75 and 4.25. Look for EIA to report a 71 bcf withdrawal on Thursday.
 

TECH TALK

The technical outlook is losing some of its bearish cant. Last night's settlement above the 10-day moving average extinguishes an active sell signal. Now the suggestion is to cover shorts but a buy signal would require a settlement above the 40-day and at 4.18, quite far away. Additionally, a consolidating market will start to move the 10-day in an upward direction, a sign of a trend change.

source: KilduffReport.Com