ALERT: OPEC DISUNITY, CARTEL FALLING APART,.....NOTHING NEW THERE.
 
PETROLEUM MARKET

Crude oil prices rose sharply in early New york trading after it was announced that OPEC would leave current production rates unchanged. Although talk of a hike only surfaced in the last week or so, the news fell on receptive ears after the lack of follow through selling at the 97.74 low the previous day, and an API report that showed crude stocks declining by 5.5 MM bbls. This was later confirmed by EIA which registered a 4.85 MM bbl drop. It is significant though that OPEC members the first time in 20 years failed to reach an agreement on production targets. The Saudi Oil Minister Ali al-Naimi described it as "one of the worst meetings...ever". Prices were also supported by a weak dollar, under pressure from the fragile US economy, which does not bode well for energy demand either. Additionally, central bank policy in Europe is expected to signal a July rate move, which will benefit the euro at the expense of the dollar. Even at almost 102.00, oil is covering no new ground and consolidative price action should continue.
 
 
TECH TALK

Crude prices, although registering a sharp upward turn yesterday have covered no new ground. Consolidation from 94.63 is still in progress and more sideways trading is possible, even probable. A break to the upside should be contained by recent highs near 104.60, and probably before. Still, a break above will target the 114.83 high. In all likelihood though the move down from that mark is still underway and break of 94.63 will target 90.00. Even though yesterday's price action was sharp, it was inconclusive as far as the picture the chart presents. There is still a discernible bear pennant.
 
 
NATURAL GAS

While gas has benefited of late from rising cooling demand, a consequence of early summer heat, and unusually high nuclear outages in the wake of Japan's problems, the current rally has managed to muster more momentum than we thought possible. Posting a high of 4.919, so far today now puts the market at the highest levels of the year and looks poised to break even higher. For the moment, a change in international perspective, from a regular heating fuel to one that has the potential to replace nuclear energy, again, as a consequence of events in Japan, is favoring gas. This image makeover in natural gas is sure to be amplifying the strength of the commodity. Participants will look to the EIA report later this morning, to register further assent or to overrule the current direction. The almost 40 cent range overnight was likely the result of algorithmic trading programs in Singapore, which recovered almost entirely within less than seven minutes, and is sure to draw the attention of US regulators to this controversial subject.
 

TECH TALK
 
The temporary consolidation top at 4.859 temporary has now been breached. Any correction to the downside will probably be contained by the 40-day moving average at 4.48, approximately the point where this last leg up began. If the 4.48-4.50 area is breached, on settlement, it will confirm an official reversal. A sustained break above the former resistance at 4.879 will indicate that the rise from the recent 4.15 area is still inherently strong and has a potential target of 6.10. However, be cautious, the fundamentals are still divergent from the technicals' bullish bias.

source: KilduffReport.Com