ALERT: BULLS MAY BE STARTING TO PANT.
 
PETROLEUM MARKET

There once again seems to be fairly robust price action over 113.00, but this occurred early this morning and with no Japan and no London makes it a difficult read. There was every reason in the world for the market to break out and make new highs. A low interest rate policy will be continued by the Fed, keeping the dollar under pressure which should have been for crude, yet an early sell-off caused prices to tumble to 111.69. While a new high for this move off 108.00 was posted, the previous highs from early April were not. Certainly soft US economic data raised doubts about the energy demand outlook. Additionally, rising pump prices have fed concern about a potential drop in demand, so with EIA reporting that crude oil demand in February was 762k bbls less than previously estimated, up only 9,000 bpd from a year earlier, this view may begin to gain acceptance. Refined products futures expire today.

 
TECH TALK

110.71, the low from Wednesday now becomes first support. As long as that make remains unchallenged the chart will keep its bullish look. However, the longer the early April highs above 114.00 remain unbreached the market will take on more of an overbought look making it susceptible bouts of profit-taking. All the most obvious signs still point upward. Prices are ahead of the moving averages, which means there is an active buy signal. So far first resistance at 113.99 is unchallenged, so consolidation between 112.00 and 114.00 continues. Stay with length if you have it, until a settlement below 112.00 is posted.
 
 
NATURAL GAS

Prices rose to a three month high yesterday, as June became the front month contract. EIA reported less of a build to stocks than was expected, so with the high degree of nuclear outages, participants saw fit to interrupt the selling that had prevailed the previous three sessions. Participants are concluding that these outages are a consequence of thorough inspections following Japan's nuclear disaster. The small build put the inventory deficit to last year at 215 bcf, and eliminated the 23 bcf surplus to the five-year average. In fact, it was the first time storage has declined below the average in two months. Still structural imbalances remain and further gains will be increasingly difficult until summer heat ramps up cooling demand. Only open new length if the high from late March is bested on settlement.
 

TECH TALK

The chart strengthened its bullish look as yesterday's rally reaffirmed the move from 4.00. A crucial test is coming as the late March high approaches. Indications off the chart seem to imply that it is inevitable. Prices are running well ahead of the moving averages and today's pivot at 4.522. First resistance will come in at 4.648. In that the market has advanced more than 14% since holding 4.00 support, this may be as good a time to take profit as any, particularly if the market pauses today. See how prices react at or above 4.65, a settlement above may generate upward momentum.
 

source: KilduffReport.Com