ALERT: SOROS.....EURO UNION BREAKUP LIKELY.
 
PETROLEUM MARKET

The market took a considerable tumble after the IEA announcement last week that it would release 60MM bbls of strategic stocks over a 30-day period in July or 2 MM bpd. However, after consideration, we are not so sure this tactic will continue to weigh on prices to the degree that officialdom would like. The machinations of the auction and the currently adequate supply cast doubt on participation. Following the last coordinated action between the IEA and the U.S. in 2005, after Hurricane Katrina knocked out a quarter of U.S. oil output, buyers took less than 37% of volumes offered in a range of grades from the SPR. Winning bids then averaged 2.7% below the prevailing futures prices at the time. Rejected bids were about 10% less. The intention is clearly to create a perception hat the market is awash in crude oil and push prices lower. We are not sure they will meet with much of a degree more of success than they have already achieved. Price could not even manage to best last week's low in overnight trading.


TECH TALK

Crude oil has lost some of the downside momentum and has been trading about 50 cents either side of 90.00. The chart still looks decidedly bearish but the inability to generate follow-on selling suggest some inherent strength. While a burst of buying shouldn't surprise, resistance at 95.70 should remain unbreached. A settlement, at least, below the recent low of 89.69 will be required to ignite another round of technical selling. On the upside, above 95.70 minor resistance will turn bias neutral. But break of 102.44 resistance is needed to confirm reversal. Otherwise, near term outlook will remain bearish.
 

NATURAL GAS

Gas regained some of the ground lost on Thursday, when it fell to its lowest price in a month, subsequent to a bearish EIA report that recorded injections well past expectations. Even though some demand supportive heat is appearing around the country, in all likelihood Friday's upward blip is probably more easily explained as  activity by those traders lucky enough to have caught the week's downward trend reaping some profits ahead of the weekend. Not a bad idea since quickly developing oversold conditions oversold have more often than not been accompanied by bouts of violent profit-taking. Temperatures in the mid 90s throughout the Midwest and a potential for readings to exceed 100 from St. Louis south to the Gulf Coast and into Texas may unleash some impressive buying and excessive volatility, particularly when expiration, month-end and quarter-end price action are added to the mix.
 

TECH TALK  

The chart presents visually, the market's inherent weakness. There is an active sell signal with prices well below the moving averages, which are beginning to move to an array that depicts a falling market. The 10-day has moved under both the 40 and 60-day and the 40-day is about to move under the 60. Still, the markets have fell to these levels just last Thursday as well as twice in May and once in April before staging impressive rallies, which should prove disconcerting for market bears. Still, a settlement above 4.50 would be needed to trigger a reversal and the upward momentum just is not here in the absence of a tropical storm or a multi week heat wave.

source: KilduffReport.Com