ALERT: COMING FOMC MINUTES WEIGH ON DOLLAR AND SUPPORT OIL.
 
PETROLEUM MARKET

Oil prices slipped on Tuesday as weak economic data fueled concerns about demand. Specifically, housing starts and building permits fell in April and factory output slumped. Coming FOMC minutes will probably also show the Federal Reserve's intent to keep interest rates low for the foreseeable future. With the ECB on guard to hike rates and the PIIG countries getting punished by the bond vigilantes, the dollar, of necessity, must suffer at the expense of the euro, helping to support oil prices, or so today's logic goes. The market has been covering the same ground for about a week. 94.50-100.00. Clearly though, the overarching concern is the fragile recovery and its ability to support oil prices at these levels. This is the reason prices have dropped the best part of $20.00 this month. We still think it has a way to go before a base has been set. 92.00-96.00 seems more realistic in today's environment, but the market will just not give it up. Maybe today's EIA reports may just do it.
 

TECH TALK

At this point, crude oil is still staying in range of 94.50/100.00 and intraday bias remains neutral. Some are pointing to a triple bottom near 94.50, but this by no means precludes another test. More consolidations could be seen but in case of another recovery, we'd expect upside to be limited by 100.00 and bring resumption of fall from 114.83. Break of 94.63 will target 90 for psychological reasons more than anything else, break of 104.60 will bring stronger rebound towards 114.83 high instead.

 
NATURAL GAS

Gas futures ended lower yesterday lower after three straight higher closes. The longs couldn't hold on with the expectation of bigger inventory builds in coming weeks, weak economic data and faltering oil markets. Warmer weather next week may see the start of some substantial cooling demand, so prices have held near 4.20. Even so, stockpile levels re main a concern, and when viewed against the backdrop of overproduction, many participants remain skeptical of the upside's ability to extend. The  Baker Hughes data, showing the gas drilling rig count fell last week to a 15-1/2-month low, may encourage the view that gas output may finally start to slow, but a well count of 874 is still above where output will be significantly cut. Look for EIA to report another 89 bcf was added to stocks for the latest reporting period. Stay with length as long as the market stays above 4.20.
 
 
TECH TALK

Recovery from 4.109 was limited at 4.330 and weakened, but downside is contained above 4.109 support so far. The moving averages are closing in on each other and losing their effectiveness. But, as of last night, there is an active sell signal, with the settlement below all three. Price action has been on either side of today's pivot at 4.223 so that indicator is neutral. Another break of 4.20 on settlement should lead to long liquidation but acquisition of short positions should not be considered until 4.00 is breached convincingly.

source: KilduffReport.Com