ALERT: WHERE'S THE RECOVERY?
 
PETROLEUM MARKET

Despite the strong rally that took prices over $100 again the market failed to hold on to these gains as confidence in the global economy waned as EU officialdom made little progress towards a solution to the Greek debt crisis. Consequently, Commodities are lower, and gold and the dollar are higher. While it's likely another bailout plan will be approved, details of the plan remained uncertain. The more complicated part is that Germany and France insist the involvement of private sectors in sharing the burden. China's implied oil demand in May topped the 9 MM bpd  mark for the seventh month in a row, suggesting brisk demand persisted even though China's economic growth was slowing. The bigger picture is still what we have been saying since mid-2008; there is very little to suggest that a sustaining recovery is underway. Trillions have been spent and the ship has still not righted itself. This does not bode well for demand for consumer staples which translates into basic commodities.
 

TECH TALK

Crude oil's break of support at 97.74 broke the market out of the bear pennant and down. Yesterday's price action put the market back up into that formation but those gains have been surrendered overnight. For market bears it must be troubling that significant new lows are difficult to come by. The bias will be to the downside given today's reversal. First support has already been broken at 99.00 and a new low for the day has been posted at 98.57. Support comes in next at 97.89 and 99.00 now becomes overhead resistance.
 

NATURAL GAS

After the early season heat wave last week from Texas to New York that briefly drove cash prices to 10-month highs, milder northern tier weather this week has slowed demand despite continued heat in the South. Still, the widening gap in inventories relative to last year at this time was lending some support to prices. But with inventories comfortable, production at record highs and more nuclear plants back in service after extended spring maintenance outages, a good deal of skepticism remains about the strength of upward momentum. EIA should report tomorrow that another 86 bcf was injected into storage, sl9ightly higher than expectations which should weigh on prices. Stay with the strategy of selling nearby 4.65 calls.
 

TECH TALK

The market is consolidating below the recently struck near term top of  4.983. Breaking back below 4.50, the point of launch for the last leg higher shifts the bias back to negative. The market is below the 10-day moving average and heading towards the 40 and 60 which are close together reflecting the relatively narrow range of recent price action. A break below 4.50, on settlement, should bring 4.00 into play rather quickly. An upside break above the recent high though may bring the elusive 5.00 level into the market's cross hairs. This is the critical juncture.
   

source: KilduffReport.Com