ALERT: FRANCE, UK AND US BEGIN NO-FLY ZONE TO PROTECT LIBYAN REBELS.
 
PETROLEUM MARKETS

No one wanted the war, everyone worked to prevent it,.....the war came. So begins a memorable tome about the American Civil War. A civil war in Libya has now begun. As much as President Obama and Secretary Clinton have sought to push the French and President Sarkozy into a leadership role, in the Islamic street it will undoubtedly play out as another American-led crusade into an Islamic country to steal their oil, with potential reprisals by the regime against foreign energy assets. In two weeks the US will own it. For oil prices this can only mean an escalation. Even as Qaddafi was seeming to go along with a cease fire on Friday, there were predictions that it would take some time for Libyan exports to reach former levels and that now can only take even longer. The Commitments report showed that speculative interests were abandoning length, but as this conflict persists that will change and may even bring in new buyers. Our view of short term strength is only firmer now.
 
 
TECH TALK

The pullback from the recent high at 106.95 had probably run its course at last Wednesday's low of 96.22. The renewed strength off recent developments targets the old high, but today's market seems to be running out of momentum at first resistance at 103.30, so far, there have been several attempts to breach it with little staying power or the ability to extend. If the market can settle past 106.95 should generate considerable follow-on buying as new length is established. With the market above all three major moving averages there is an active buy signal, as well.
 
 
NATURAL GAS

Gas prices continue to show short-term strength, the circumstantial evidence supporting it follows. One, Baker Hughes Inc. said the rig count declined 7 to 875 this week, the lowest level since Jan. 29, 2010. Two, increase in LNG cargoes diverted to Japan. Three, the unexpectedly large pull from stocks last week despite relatively mild weather. Rig counts have to be cut to almost 800 in order to make a significant difference, LNG imports only account for 1.7% of total gas demand and even with the inordinately high draw down from storage last week supplies should be more than ample, particularly as the lower demand season approaches. The real answer lies in the technicals, were things are beginning to look a bit bullish.
 
 
TECH TALK

The chart now presents an identifiable rounded bottom with each successively weaker attempt to pierce an important support zone. Thursday's bar activated a buy signal with the settlement above the 10 and 40-day moving averages and with trading above the 200-day today with possible settlement above an important entry and exit point for speculative interests will have been surpassed. With trading today all above the pivot point of 4.155, the short end strength displayed implies momentum could possibly carry above 4.274, the high of February 3rd. It would also fill in a small gap left (circle) from  February 4-7th between 4.274 and 4.287.

source: KilduffReport.Com