ALERT: US POSTS POOR Q2 GDP OF 1.3% ADDING TO DEBT CEILING ANXIETY AS US LEADERSHIP CRUMBLES.
 
PETROLEUM MARKET

Crude oil surrendered yesterday's small gains in the early going today as the US debt ceiling dilemma remains unresolved as the August 2nd deadline looms. Adding to the ominous foreboding, Moody's put the Spanish government bonds rating under review and Italy's bond auction was not as successful as expected. A strengthening dollar may pressure crude oil further to the downside, as the dollar is still extending yesterday's gains. Focus will still be on the Congress' lack of resolve, downgrade pressure and the GDP number, later this morning. Participants seem set for a 1.8% reading for Q2, the second sub-2%. But even if the number comes in somewhat higher than economists are expecting, it will be no cause for celebration. If the domestic economy is capable of a 2.5% growth rate, that only accommodates population growth and productivity growth and not even close to putting the millions of Americans still unemployed back to work. And that can not be enough to support rising energy costs, as well.

 
TECH TALK

Intraday bias in crude oil points lower. With the first level of support challenged three times in the early going, the market looks particularly vulnerable. With 102.44 resistance still unbreached, the move down from the 114.83 high is intact, and in favor to continue. Below 94.74 selling should accelerate with a target of 89.61.However, a sustained move that carries higher will eventually close in on the 50% retracement of 114.83 to 89.61 move at 102.22. Right now the particular focus is at 96.00, the break of the last leg of the move off the recent low near 90.00. A break of 96.00 will retarget that mark.
 
 
NATURAL GAS

Even as "Don" approaches the Texas coast, after forcing rig evacuations, participants are more focused on abundant supply and prices remain under duress after yesterday's EIA report. The report, which showed that storage grew by 43 bcf, was well beyond estimates which were closer to 40 bcf. Prices dropped to mulch-week lows immediately thereafter but have since recovers somewhat. While still in deficit to historic averages, total domestic stocks of 2.714 Tcf are more than sufficient to cover localized demand spikes. Temperatures are on the rise again into next week, but why not, it's August and storm season is passing with hardly a ripple. Coming off last week's highs some pre-weekend, and month-end book-squaring might be expected, particularly with the uncertainty of Washington reaching a debt accord quite high, but price erosion should continue into next week.   
 

TECH TALK

Intraday is on the downside for a retest of the recent low at 4.064 first. A breach of that mark will suggest a resumption of the decline from 4.983. A move above 4.474, on settlement, will change that view to positive wit a target of to 4.632, which we remind is the 61.8% retracement of the move down from 4.983 to 4.064 move. Obviously then, trade above 4.632 will put the high 4.983 as the next logical target.
 

source: KilduffReport.Com