ALERT: PERCEPTION OF ECONOMIC MALAISE SPREADING.
 
PETROLEUM MARKET

It should come as no surprise that speculative interests cut back on length according to the latest Commitments report. Though this report does not measure the sharp jump on Wednesday, a consequence of the inconclusive OPEC meeting, we suspect that those buyers gave those positions back on Thursday, Friday and in today's overnight session. The idea that the global economy is in trouble is spreading. Currently, signs of stagnation are more prevalent than indications of spreading recovery. Divided political adherence has broken the close relationship among member countries within OPEC. Corporations flush with cash are not hiring and consumers are not spending. Bernanke admits the Fed is powerless to do much more and in Europe the "D" word is now being heard from officialdom for the first time. After reaching to over $114.00 earlier this year, crude oil now has a difficult time holding $100.00. It is eminently possible then that a straight economic calculation for the value of crude oil could bring prices closer to $90.00 quite soon.
 
 
TECH TALK

The bear pennant suggests that a downside breakout could occur soon, probably this week. A break of 97.74 on settlement will turn the bias to the downside. Friday's action reactivates a sell signal with prices below the moving averages and trading below support 100, now makes that mark resistance. A break to new lows below 96.00 will open the way to 90.00 and lower. Strong support will not be found until 83.88. Do not be surprised though at more consolidative action as the market moves towards contract expiration next Tuesday.
 

NATURAL GAS

Price action last week registered a retreat from the ten month highs posted on Thursday. Last week saw natural gas prices pull back sharply from a ten-month high on Thursday. Hardly surprising, EIA reportedd a larger than expected build to stocks of 80 bcf rather than the 77 bcf anticipated. There are 2.187 Tcf stored, only six weeks into the rebuilding season. Early season heat and an usually high number of nuclear outages helped create a deficit to last year, but this will be short-lived. Prices did rebound somewhat on Friday, but this was more a bargain-hunting reaction to the previous day's fall and a reaction to the Baker Hughes count of active drilling rigs, which fell for the first time in three weeks.
 
 
TECH TALK

Prices broke to a new high last week to 4.983 last week easily breaking through resistance at the old high of 4.879.  however the quick retreat suggests some inherent weakness and support near 4.40 will have to hold before another leg higher can be mounted. A breach will target 4.00 and then the support band of 3.60-3.80 beyond. I however, upward momentum gathers and another new high above 4.983 is posted, a run to over 6.00 is possible.

source: KilduffReport.Com