ALERT: QADAFFI MAY CRUMBLE SOON
 
PETROLEUM MARKET

Crude oil prices persist stubbornly above $100, but have leaked away more than a dollar of values since the upward break on Wednesday after the OPEC announcement. Demand for safe-haven assets and store of valued remained robust as investors concerned about growth outlook and sovereign debt crisis in the Eurozone. Therein lies the dilemma for oil market participants. Those very qualities will disappear precisely as a consequence of what they fear the most. Values will erode as demand contracts and that is exactly what is going to happen as either default or the austerity required by restructuring or bailout takes hold. Stagnant growth in the US and attempts to slow growth in China and India will exacerbate this. Reports this morning also suggest that the Qaddafi regime is nearing collapse and that Libya's rebels hoped to restart oil production soon and had gained aid pledges of more than $1.1 billion will alleviate some of the geopolitical pressure that drove prices to these levels in the first place. Significantly, lower oil prices would be more of a boon to the US economy than another round of QE, for sure.
 
 
TECH TALK

Wednesday's rally put prices above the 10-day moving average which was only mildly bullish, but did remove an active sell signal. Averages are still arrayed though to depict a falling market. There is still a discernible bear pennant. The market looks set to settle below the 10-day by tonight and it will reactivate the sell signal. More consolidative trading is suggested by the chart but there is still a downward bias. The market held early support at 100.58 and another stab at 102.00 should not be ruled out.

 
NATURAL GAS

Dissipation of early summer heat has led to an erosion of the upward momentum experienced of late. Certainly a storage report showing injections a bit above expectations were not helpful, either. Additionally, gas' mini flash crash must have cost some participants heavily and shakes confidence. After posting a 10 month high of 4.983, sellers appeared in abundance. A settlement below the market's break out point shows the fragility of the rally. The structural imbalances will just not go away. Widespread skepticism of any upward surge must be called into question EIA in its June Short-Term Energy Outlook raised its estimate for domestic gas production growth, and also expects inventories at the end of October to be near a record high above 3.8 Tcf trillion cubic feet due to healthy production and a milder summer relative to last year.
 

TECH TALK

The chart took on a more bullish look as the early May high was breached. However, the posting of a new high and a far lower close, one actually below the market's last break out point is exceptionally bearish and returns the bias to the downside. Prices struggling near round numbers like the $5.00 mark suggest producer hedging and halt further upside. If prices can not hold above 4.50 then a retest of 4.00 could occur very quickly, particularly if sellers are encouraged by large weekly builds to stocks.
 

source: KilduffReport.Com