ALERT: SAUDI OIL MINISTER SAYS MARKET IS OVERSUPPLIED.
 
PETROLEUM MARKET

Oil prices fell in overnight trading on comments by al-Naimi who stated that the world oil market is oversupplied. China's announcement raising the reserve requirement ratio again intensifies worries over slowdown in demand growth. NYMEX front-month slipped below 109 for thew first time in days. Participants are sifting perceptions off of Chinese inflation data, rising tensions in Libya and the worsening European debt debacle. Prices unconvincingly broken through support at 108.09 and posted a 107.77 low before reversing back over 108 again on Friday. This morning prices fell to 108.33 before reversing. Covering the same ground over and over, when viewed against the backdrop of lower volume can not give much confidence to market bulls. There is little doubt that China will have to raise reserve requirements again as it is equally plain that European debt yields will go ever higher as the market punishes their profligacy. In the final analysis it is hard to see how the recovery will not be derailed. Little wonder then that speculative shorts contracted in the recent Commitments report.
 
 
TECH TALK

110.24 resistance remains  intact,  as does support at105.3. A breach of either side should generate more momentum in the direction of the break. But a fall should be limited to 98.00 or so. A break higher on settlement above 110.24 will target 113.46 resistance first,  then 114.98. A loss of momentum there should cause a reversal, unless of course it is a consequence of an exogenous event. With price action intraday still extending to almost 109.00 the move from the January lows may not have yet concluded, but a continuation will require a move past the recent highs at 114.00.
 
 
NATURAL GAS

Prices finished the week on a down note reflecting the  milder Northeast and Midwest weather expected next week. Whether or not prices can keep the gains of last week will, of course, depend on how gradual the warming is coming out of winter. Storage buying and planned nuclear and coal  maintenance outages have helped buoy prices, as well. And while EIA expects industrial demand to grow this year by 3.6%, it will be insufficient to balance the market without serious production cuts, much more than the Baker Hughes data on Friday which showed the number of rigs drilling for gas decking for the second straight week. We still see an assault on 4.00 opening the way for further declines over the next several weeks, But, if it does not materialize, participants will see a major bottom in place that may produce more than just short-covering.
 
 
TECH TALK

Despite the recent gains that drove prices above chart resistance, gas continues to lose momentum near 4.20. Stronger than expected recovery from 3.99 dampened the near term bearish view into a neutral one, particularly without supporting fundamentals. Moving averages are coming together, which also shows the market's neutrality, but the 10-day still moving towards the 60-day shows some inherent weakness. On the downside, break of 4.071 minor support will flip bias back to the downside for 3.99 and then 3.731 support. On the upside, however, break of 4.48 will indicate that rebound from 3.731 has resumed and could extend to retest 4.879 resistance instead.
    
 

source: KilduffReport.Com