ALERT: COMING DATA NOT EXPECTED TO BE ROSY.
 
PETROLEUM MARKET

With gold setting new records almost hourly, and stocks on an 8 day losing streak, investor sentiment is obvious, and does not exclude the oil patch. There is little argument that signs of a slowing US economy indicate that demand for oil will falter. No increase in consumer spending, in real terms, in 4 months is particularly ominous. A ratings downgrade will raise borrowing costs and rising yields on Treasury securities will strengthen the dollar, exerting more downward pressure on oil prices. Portugal's 15-day auction this morning forced them to pay 4.967%, a fate that may not be far off for the rest of Europe and the US. In short, the question we have been continually posing is being answered by price action in global markets; what is there good for energy demand growth that is going to come out of this? Our conclusion looks to be achieving unanimity, not much. API yesterday said crude stockpiles declined 3.31MM bbls last week to 354.9MM, while gasoline supplies increased 2.55MM to 212.2MM. EIA is expected to report that crude inventories climbed 1.5MM bbls.
 

TECH TALK

There is a discernible downtrend on the chart. The distance to the 13-day EMA is widening. Yesterday had another lower low, lower high and lower settlement, both of which show the bears gaining strength. Intraday bias in crude oil remains on the downside for the moment and the current fall from 100.62 is still in progress targeting 86.61. A break will confirm resumption of fall from 114.83 towards support near 83.65/85. A reversal above 96.00, on settlement, will negate this move and put the bias back to bullishness. Moving up through the recent high of 100.62 could be the start of a new uptrend, but there is a low probability of that occurring in the current environment.
 

NATURAL GAS

With the thermometer hovering close to seasonal norms and Tropical Storm Emily posing little threat to Gulf production it should be no surprise that prices are falling. Of greater importance though is the drumbeat of negatives that continue to buffet markets looking to economic data for directional cues. The GDP number last Friday,  the ISM report on Monday and today's coming ream of data, are drawing a picture from which there is scant evidence of economic growth, and thus expanding demand. On the other side of the equation, yesterday's EIA data revealed that while domestic gas output in May fell slightly from April, it offered no significant evidence that production is being slowed. Tapping huge reserves from shale formations, production set a record in April, low prices notwithstanding. So, a poorly performing economy keeping demand in check and surging production should push prices even lower. Bargain hunters have appeared in the past as prices approached 4.00. We wonder if they will this time.

 
TECH TALK

Downside momentum continues with yesterday's lower settlement and should carry to the recent low of 4.064. A break, on settlement should carry through the psychological barrier of 4.00. That breach, when it occurs, will confirm resumption of whole fall from 4.983 with a target of the familiar band of support between 3.60-3.80, a break of which should bring 3.00 into play quickly, with an ultimate target of 3.255.A reversal needs to surmount the 13-day EMA first, at 3.266. A move above resistance  at 4.339 will put the bias to the upside for a test of key resistance at 4.612.
 

source: KilduffReport.Com