ALERT: EUROPEAN CREDIT HISTRIONICS OVER GREECE REACHING FEVER PITCH.
 
PETROLEUM MARKET

Oil has stabilized somewhat after another leg of the dramatic sell-off that has brought prices down from almost 115.00 early last month; although prices are still far above a straight economic calculation. The latest machinations seem to have found causality in the European credit debacle, and a continuing stream of weak domestic economic data. No matter what Greece does, no matter what Merkel and Sarkozy come up with, no matter how the IMF/EU repackages it, Greece is going to default. It may come dressed up as a "restructuring" but it is the same thing. And so will one of Portugal or Spain, possibly both. There also does not appear to be an end to the economic malaise in the US. As we stated yesterday, the economy is not substantially better off than the weekend Lehman went under, where subsequently oil broke down to  about 30.00. while we don't see that happening again, crude oil could decline a long way.


TECH TALK

Crude oil stabilized near 92.00 in July and has since taken back half the day's loss. This is the area we predicted sideways trading would take place, 92-96. The trend though is decidedly lower. With the market well below the moving averages and below key support, now resistance at 95.45, the move could possibly finally trace out to 89.96 where important support should come in, break lower though would target 85.85. On the upside, above 99.95 minor resistance is needed to signal short term bottoming. Until then we will stay with our bearish prediction.
 

NATURAL GAS

Gas was able to post its fourth negative session as well as a three week low despite injections coming in below expectations. Whether the ongoing structural imbalances of record production, ample supply and mild weather or the current perceptions of the recovery, the combination of the two are certainly not supportive. The breach of the 40 and 60-day moving averages adds to the market's negative look. Even the inventory gap to last year widening was not enough to bring support. So, organically negative influences and little or no effect off positive ones, suggests that sentiment has definitely swung in favor of market bears. If international histrionics continue at these levels, and Congress continues to show disdain for any assistance towards energy development then 4.00 could come in to play quickly.
 
 
TECH TALK

Market is to the downside, particularly now that 4.50, and the moving averages have been breached. There may be some minor support near 4.42, the point from which the final leg higher to 4.983 was launched, but once broken there is really no significant support until the psychological level of 4.00 is reached and beyond that the support band, going back to last year at 3.60-3.80. If however, 4.42 holds, upward momentum needs to break out above 4.80 again to have any credibility.

source: KilduffReport.Com