ALERT: PEOPLE'S BANK OF CHINA RAISED INTEREST RATES AGAIN HOPING TO REIN IN INFLATION.
 
PETROLEUM MARKET

Oil prices rose to their highest since 2008 on Monday, with Brent surging above $121 a barrel as Nigerian election delays and a short-lived strike in Gabon joined a list of geopolitical supply concerns. However, rising for the third session on persistently weak volume makes us skeptical of the curry rally's inherent strength. Still, Libya's ongoing civil war and the latest signs of unrest in Yemen prudence dictates strategic length. The Chinese juggernaut keeps moving forward like a freight train, and Bernanke's comments yesterday express concern about US inflation, as well. Clearly that will show up right here in the market for real "stuff." But clearly, the market for crude oil is running well ahead of the economy on geopolitical issues, which are a long way from resolution, even as they are probably priced in.  


TECH TALK

Crude lost some momentum since yesterday, but this can not be called a significant break to the downside. Moving averages still depict a rising market and a buy signal is still active. A downside break should be contained above 102.70. Our "M" pattern from last week appears to be negated by the last leg up but could still trace out if it occurs over the next few sessions. Low volumes worry us and don't be surprised to see a violent shake-out of the weak longs of anywhere between $1.00 and $3.00 for the remainder of the week. If it does not occur a steady drumbeat to 110.00 is possible. Look for momentum to grow from that point.
 
 
NATURAL GAS

Ample supply and a turn in the weather will do it every time, especially at this time of year. Add to this scenario the continual overproduction and only technical influences are left to buoy the market. Interestingly, outer months, particularly the summer months shed about .07 cents, as well, carrying implications about expectations for cooling demand. Even if those expectations are exceeded, production of shale gas will probably continue apace. In the near-term, weather  forecasts call for milder Northeast and Midwest readings this week, with highs at times breaking above 60 degrees, so no help from Mother Nature.

 
TECH TALK

Intraday bias remains neutral for the moment but consolidations near 4.00 could still occur.  A significant breach of 4.195 would re-target the recent low of 3.731 and put the market right back into the strengthening band of support at 3.60-3.80 that has held for two tests. If the market breaks above the recent high of 4.496 the next level of resistance and the market's target will be the previous high of 4.879. The chart is looking more bearish though now that prices have dipped below the 10-day moving average.

source: KilduffReport.Com