ALERT: EUROZONE BEGINS FINAL DAYS.
 
PETROLEUM MARKET

Why the financial press and the markets are taking solace from the coming parliamentary accord on Greek austerity, is quite frankly, beyond us. It will, at very best, only forestalls the inevitable, which is default, not only for Greece but for the peripheral countries, as well. Why this translates into rising crude oil prices makes little sense. It certainly can not be a measure of coming demand growth; of necessity, austerity will result in severely constrained economic activity. Additionally, even though borrowing costs in the euro zone will rise, climbing yields will not be enough to blunt the risk aversion that will benefit the dollar at the expense of the euro, so in effect they will also be importing inflation. And then..............stagflation! None of this can be very good for energy demand growth. About the only thing we can think of if faith in currencies gets so low oil becomes a medium of exchange in the international barter system to come.

We will be suspending publication from July 1st, returning July 5th in observance of Independence Day.
 
 
TECH TALK

Crude oil has now traded up out of its low struck in the past week. Settlement last night was still below the moving averages, leaving a active sell signal, but well above first support at 92.23, which suggests some strength. Additionally, the longer term trendline remains unbroken so the move down from over $14.00, begun in May is still intact. Although recent activity does represent a bullish divergence, it is still too early to declare the current trend over. A settlement over 96.00 would be required as minimum evidence that a bull trend has possibly begun.
 
 
NATURAL GAS

The expectation of rising temperatures during early July, a tropical formation in the Gulf, which has now become tropical storm Arlene, a changing technical picture and month and quarter end machinations are all contributing to the upward momentum of the past few days. Still, the structural imbalances of high stocks, record production, and constrained demand have kept are prices below $5.00 for over a year now. However, even given the bearish tone to the market and the economy, support near $4.00 is stubbornly resilient. We were on the high side for our injection estimate last week and we will be again this week. We think EIA will report an injection of 88 bcf tomorrow. As of last week there were 2.354 Tcf in storage. While still a deficit to last year more than adequate for current demand, even more so this week with schools mostly closed around the country.
 
 
TECH TALK  

The market following the waves that have basically held the market flat for the past year. There are some early signs that the upper edge of that range is turning up somewhat but it is too early to tell. On longer term charts, prices have moved above the trendline from the highs of mid-2008, but that is way too weak a signal to herald the end of a two and a half year trend, but it does bear watching. Closer in, even though the market has trended higher for three sessions, the settlement yesterday was still below the moving averages leaving a sell signal active. The 40-day is moving towards the 200-day and should duck under today. But the market is holding above first support at 4.324 which suggests there is still some strength to the current move.
 

source: KilduffReport.Com