ALERT: EIGHT DAYS TO GO, CRUNCH TIME IS NOW!
 
PETROLEUM MARKET

The debt ceiling! The debt ceiling! All debt ceiling...all the time! Like it or not this will be the focus all week, like it or not. Crude oil's role as a macroeconomic measure is linked to the dollar index as the measure of sentiment on the likelihood, or not, of an agreement being reached by the deadline of Tuesday next, August 2nd. The price of insuring US debt, as measured by credit default swap prices, suggests that a probability of default is low. But in the event of a US default, the dollar should weaken further and as a consequence, oil prices should initially rally. We say initially, because a sharply rising oil price will act as a drag on economic activity, as will rising interest rates and those should combine to eventually check rising oil prices in check. In fact, it is this fear that has kept oil prices in negative territory during the overnight session. Naturally, the market will be buffeted by the next headline, until a resolution appears. Trading today will probably be confined to the noncommittal range of 98.75-99.50 which has prevailed for this session, so far..
 

TECH TALK

Daily ranges have been tightening on fairly good volume over the last week. This suggests that the market is approaching a comfort zone, despite putting in higher highs, higher lows and, in fact, a new high since the recent bottom near 90.00, posted in late June at 100.19, on Friday. The bias will remain positive with a target of 102.00. Actually 102.44 is the 50% retracement of the entire move from the 114.83 high to the 89.61 low. How the market acts once this point is reached(or not) will be a powerful directional cue. It also looks like an ascending triangle is being etched out with a relatively flat upper boundary around 100.00 and a rising lower boundary, suggesting an upside breakout.
 
 
NATURAL GAS

The most salient feature of last week's price action was influenced by a blast of heat and humidity that gave cooling demand a kick. Naturally, as the mercury falls, so do prices. With that fall comes a refocus on the underlying reality which essentially means that drilling and fracking continue apace , which is why EIA holds that 2011 output should total 23.8 Tcf , considerably outpacing the  previous record. Meanwhile demand conditions are beginning to improve. Imports from Canada are down, exports to Mexico are up, seasonal nuclear maintenance shutdowns were particularly high this spring and summer heat arrived early. But despite the slight improvement in structural imbalances fluctuations in the temperature will exert the greatest influence on futures prices. Accordingly, the market dipped to a six-day low on Friday, as forecasts showed warmer-than-normal weather across most parts of the US will moderate this week. The larger picture then does not present a high probability for deviation from conditions that have prevailed for some time. Most likely, prices will stay in the 4 .00-5.00 range, with occasional probe below 4.00 and above 5.00 dictated by short term meteorological deviations, into next year.
 

TECH TALK

The resistance ahead of 61.8% retracement of 4.983 to 4.064 at 4.632 makes for a negative market bias heading into the new week. In fact, the break below support at 4.397 suggests that that move is finished, and the recent low at 4.064 is again targeted. Conversely, a break of resistance at 4.612 will bring the mid-June high of 4.983 back into focus. Still the highest probability is that range trading will continue, with the densest action confined to the 4.20-4.50 area. A decisive break of either side, on settlement, and absent a fundamental anomaly, will target 4.00 and 5.00 respectively, then the most recent highs and lows beyond those points.
 

source: KilduffReport.Com