ALERT: CORRECTION OR TREND REVERSAL? TOO EARLY TO TELL.
 
PETROLEUM MARKET

Oil rebounded Monday, after last week's dramatic sell-off. This will frame the debate. Was last week's price action a correction or a trend reversal? Uncertainty, and volatility will remain high until this conundrum is resolved. One directional clue may be gleaned from the  record high for open interest. The rise in open interest after such a dramatic sell-off suggests that  investors are reversing course and that the new shorts positions were of such a size that there may be more downside to go. Of course rising prices since Friday's close will fuel the argument against this. It looks, at least temporarily, that fundamentals have come back into focus and today's buying will mark out what will become the high side of a range that could be delineated by 101.00 and 97.00. The long,tall and short of it is that there was no compelling factor for crude oil prices to have reversed by almost $4.00 since Friday's close, and the market is surrendering those gains at this writing.

 
TECH TALK

The bias for crude has turned back to neutral after some good buying late Friday and in the overnight electronic session. Consolidations could be seen above 94.63, the temporary low. But upside of recovery is expected to be limited, this morning's high of  100.69 may be just it. Otherwise, there is an active sell signal with prices below the moving averages, but the market running well ahead of the pivot, shows a key divergence.  A short term top is at least formed at 114.83 and below a bottom at 94.63, a breach of which will test 90.00 very quickly.
 
 
NATURAL GAS

Gas was initially dragged lower in sympathy, not only in the rest of the complex, but with commodities, in general. However, unlike other markets gas stabilized on Friday. So far today, prices are right about where they finished on Thursday. Forecasts show that the South may generate some real cooling demand in the next several days. Additionally, the warm weather will spread along the east coast into New York and New England by the middle of the month as high summer approaches. Market participants will also be on heightened alert for storms once June arrives. Imbalances still dominate the market so gains will be limited as the injection season progresses. Total storage stood at 1.757 Tcf in the week ended April 29, after a larger-than-expected buildup of 72 billion cubic feet last week.
 
 
TECH TALK

Bias is neutral in that gas did not follow the rest of the complex lower, below 4.00, although this is still a possibility as long as support turned to resistance at 4.50 remains unchallenged. A break of 4.00 will re-target 3.731, While an upside breach of 4.50 will bring the previous high of 4.729 back into play with a target of 4.879 beyond. Prices settled Friday just through the moving averages which activates a sell signal ,but with most price action on either side of today's pivot at 4.265 divergences are already beginning to show up.
 

source: KilduffReport.Com