ALERT: SUSPENSION OF SOME JAPANESE REFINERY CAPACITY COULD RAISE DEMAND FOR IMPORTS. QAD(DAFFY) READY TO VANQUISH REBELS.

PETROLEUM MARKETS

While the quake damage is limited to the northern Tohoku region it represents 8% GDP. Concerning the oil markets, closure of refinery plants should exert downward pressure on crude oil prices. However, it should be positive for refinery margins in Asia in the near-term. Japan is the world's third largest oil consumer. While the disaster will delay the country's economic recovery and dampen its oil demand, its consumption remains significant to the world's oil market. The consequent rebuilding efforts will unquestionably result in bigger oil imports from foreign countries. The quake and European seasonal refinery maintenance has temporarily given cover to Libya's Col. Qaddafi. He has now rallied his supporters and is pushing back rebel gains of the last week while the US, EU and NATO continue to fiddle. Elsewhere, Saudi troops have entered Bahrain to help quell unrest there.
 

TECH TALK
 
Crude oil's pull back from 106.95 is still in progress and a further decline towards 88.00, where all of this began, might be possible. Prices moved below the 10-day moving average on Friday's settlement extinguishing an active buy signal, and shows front-end weakness. Gap support should hold but if it does not prices could challenge 90.00 very quickly. For the moment though, technicals take a back seat to the headlines.
 
 
NATURAL GAS

Asia's second largest energy user has now shut a considerable portion of their nuclear facilities from which over a quarter of their energy needs were answered. Consequently they may be forced to enter the international marketplace to buy up LNG in significant quantities. While the US does not export gas and supply will still be a problem for market bulls, looking at the international marketplace as a whole it is hard not to see spillover buying. Japan's demand for LNG could rise by as much as 12 bn cubic meters if 10 of its reactors remains shut through 2012, cutting global oversupply by at least a third and boosting prices, particularly in Europe. The damage in Japan and the clean-up and rebuilding may do quite a bit to straighten out the structural imbalances in the gas market.
 

TECH TALK

Natural gas recovers further today but over all outlook remains unchanged. Intra-day bias remains neutral and some more consolidations may be seen on the front end. The decline may resume however, as long as 4.1 resistance holds. Touching of 4.10 will indicate that a short term bottom is formed. Settlement above the 10-day moving average on Friday extinguishes the active sell signal and with most activity so far today above the pivot of 3.881, shows the front end strength.

source: KilduffReport.Com