ALERT: SIGNS OF CHINESE GROTH EMBOLDEN BUYERS, FOR NOW.
 

PETROLEUM MARKET

Commodities, in general, came under selling pressure as more and more evidence mounted that the global economy was beginning to swoon. With a Greek default.....oh excuse me....restructuring looming, China and India hitting the brakes to cool inflation, and now this morning, US retail sales falling for the first time in eleven months. Add to it Federal Reserve officialdom admitting that they are powerless to do more to assist a recovery and policymakers at wit's end to prevent the slide and it's not surprising that the effect of consumers on demand is outweighing the allure of hard assets. Investor's have momentarily focused off rising inflation and monetary tightening in China with the release of Chinese economic data which was issued today that revealed a potential for energy demand growth. Industrial production showed a 13.3% increase in May while retail sales rose 16.9%.

 
TECH TALK

Crude oil's break of support at 97.74 broke the market out of the bear pennant and down. The bias will be to the downside, but for today, at least, the market is showing some strength with a lack of follow through selling. The low of the early May sell-off in the high 95's will be the first target. A break to new territory below there should target 90.00 rather quickly. We see a potential bottoming in the 85.00-88.00 zone. A break to the upside would need to settle above the recent highs near 104.00 for confirmation. Do not be surprised though at more consolidative action as the market moves towards contract expiration next Tuesday.
 
 
NATURAL GAS

Prices broke down through the point from which the last leg higher was launched giving the market a bearish look. A major impetus for sellers, obviously, are the forecasts for cooler weather across the high consumption regions following last week's heat wave. A retrace back toward $4.50 is quite understandable. Additionally, nuclear power generation is rebounding. Besides record production, and ample stocks constrained economic activity has also weighed on gas prices over the past year or so and a move higher of any significance can be ruled out until there is a sustained increase in manufacturing activity, as  industrial users typically account for about a third of domestic natural-gas demand which is why the $5 level remains elusive.
 
 
TECH TALK

The market is consolidating below the recently struck near term top of  4.983. Breaking back below 4.80, the zone from which the last leg higher was launched turns the bias to negative, once again. Settling below the 10-day moving average also extinguishes an active buy signal. More sideways action may occur with support coming in at about 4.40.  Above  the recent high above 4.983 will target 5.355 first, then 6.108. A break below support will target 4.00 then the support band below at 3.60-3.80 and ultimately, 2.409.

source: KilduffReport.Com