ALERT: D-DAY IN CONGRESS AS DEBT CEILING DEBATE COMES TO A HEAD.
 
PETROLEUM MARKET

Oil prices yesterday, at different points, were up and down on the day over $1.40, and finished only .39 higher, on good volume and only a small change in open interest. Traders will have considerable difficulty gleaning a directional cue from that action; although at first glance it looks like the power of the bulls is waning a bit. Prices have been stuck in a range defined by the 93.55 low of July 12 and and yesterday's high. Last night's API weekly report showed crude stocks rose 4MM bbls last week, against expectations for a drop. The weak dollar added some support for oil but consideration of higher yields on treasuries, which will accompany a downgrade, which now seems inevitable, should reverse that trend. While technical considerations still give a slight edge to the bulls, we have to still wonder, from a fundamental perspective, what good for energy demand growth can come from all of this?
 

TECH TALK

Yesterday's price action was an "outside" day with a higher close, so the intraday bias goes to the bulls by a microscopic hair. The deviation from Monday's close by almost equal amounts to only finish up by .39 shows an expression of exhaustion, producing no dominant direction. The ascending triangle we have been tracking looks to be coming to and end, and yesterday's new high for this particular move looks to be a false breakout as it expired well short of taking out significant resistance at 102.44. Ergo, we still favor a mild decline before buying regains strength, probably to about 96.00 or so. A convincing break there would retarget the recent low at 89.61.
 
 
NATURAL GAS

As heat recedes, the mercury drops and so do gas prices. No surprise there. Northeast and Midwest readings are not expected to match last week's triple-digit levels. Despite the extraordinary heat, and even in the event of a storm in the Gulf, high production should keep the market well supplied, and prices capped. Volume has also been off a bit this week as option expiration approached, and with contract expiration today, volume is migrating to the September contract, as well. We think EIA will report, later this morning, that 36 bcf has been injected to stocks for the latest period, close to market expectations and historical norms. It will probably take a measure above 45 bcf or below 30 bcf to effect appreciable price movement. The inventory deficit to last year has obviously been supportive, of late but that gap has narrowed recently and the closing spread prices to winter months, and consideration of the cash premium has obviated the strategy of buying and holding for non-commercials. So that element of support should begin to wane as the halfway point of the storm season approaches.
 
N.B. TODAY IS LAST TRADING DAY FOR AUGUST GAS.
 
 
TECH TALK

Intraday bias remains mildly on the downside for a retest on 4.064,  even though downside momentum is a bit tepid. A movement above 4.612 will refocus on the resumption of the rebound from 4.064 through the 61.8% retracement of the 4.983 to 4.064 move at 4.632 which will retarget 4.983. Lacking anything new of fundamental import will probably produce more range trading in the 4.20-4.50 area. A break below will favor another fall eventually to 3.255.
 

source: KilduffReport.Com