ALERT: POOR ECONOMIC DATA CONTINUES TO WEIGH ON ENERGY PRICES
 
PETROLEUM MARKET

Oil prices remain under pressure this morning. The recent lows are now the current downside objective. The theme remains the same in terms of the diminishing economic outlook. This morning gave the market another dismal housing reading -- housing starts plummeted, which, given the continuing foreclosure crisis, why would a company embark on a new development. Industrial production also hit a wall. This is consistent with the much of the recent data that seems to presage another slowdown -- the monthly unemployment data notwithstanding. The geopolitical mix is stirring again, but possibly on the bearish side of the ledger. Iran has asked to renew nuclear talks. Libya's oil minister has apparently fled the country. Tougher to read is North Korea's call for emergency food aid from the US; this could cause some sabre rattling or acting out on the peninsula. Keep in mind, however, that recent, North Korea worries have been negative for crude oil prices because this represents a crisis in the demand center as opposed to regional upset in the Middle East which necessarily strikes out the global production center. Libya Hitting a low of 96.17 in fell to 95.25 early, yesterday, but managed an impressive rally to nearly $100.50 later in the session. So, the wide daily ranges persist, and conviction about the next direction is difficult to acquire. The dollar continues to rebound, as the Greek debt saga drags on and introduces the bond market to a new concept: reprofiling. How it's different from a restructuring remains to be seen, but we recall S&P's warning that anything that causes a bond's present net value to change equates to a default. We expect prices to continue to grind lower, ending up in the 88-92 range.
 

TECH TALK

Crude oil prices are consolidating around the $98 level. Although, this morning we are well below the 100-day MA of 98.41. This will represent considerable upside resistance going forward. On the downside, the recent lows of 95.25 and 94.63 have formed a double-bottom for the recent move. If broken, there is little to restrain a slide down to 88-92 range of several months ago. Volume has diminished, which may be contributing to the wide daily ranges.
 

NATURAL GAS

Natural gas is selling off this morning in sympathy with renewed pressure on the petroleum complex. Poor economic readings -- housing starts and industrial production -- take away from the industrial calculus that was helping to support prices earlier this year. Moderate temperatures are resulting in diminished demand for neither cooling nor heating even though the 6-10 day forecast from the NWS calls for above-normal temperatures in the eastern half of the country. The look ahead to Thursday's injection report may flirt with a triple-digit reading. Certainly, though, the broader macro trade at work will have natural gas in disfavor as much as the rest of the commodity sector for now. A break toward or below $4.00 should represent a value opportunity however
 
 
TECH TALK

After breaking the recent down channel, prices are poised to retest the recent lows. Prices are below the 30- and 90-day MA and poised to retest Thursday's low of 4.109. Follow-through selling will cause a test of 4.100, 4.063, and 3.990. On the upside, due to the width of the daily bars that comprise the recent range, upside resistance is seen in the area of 4.28-4.30.
 

source: KilduffReport.Com