IntroView
 
Equity markets continue to try and climb back from the recent sell-off with resistance seen in the S&P 500 futures at 1140-1150. The developments in Libya have helped marginally, so far. Qaddafi is not gone, yet, and concerns over the oil infrasturcture seem to resonate. The build-up to Friday's Federal Reserve confab in Jackson Hole is main focus of the week. And it is difficult to imagine that additional monetary easing measures will not be put forward. As our alert indicates, the pressure on the dollar is mounting ahead of Friday's meeting, boosting commodity prices, in particular. Stocks may follow, as well. Gold rallied above $1900, for a time, last night, as the gold bugs are going along and not fighting the Fed - nor should investors.

 
Petroleum Markets
 
The media seems more optimistic about the return of Libyan oil damping prices than market participants, who have bid up prices to last week's levels. Crude oil for October delivery finished Monday 2.01 higher from Friday's close and at this writing is over another dollar higher still. Libya's 1.6MM bbl/day production represents drops in the ocean when viewed against total global consumption. It is a currency play more than anything else. The euro is rallying this morning, even in the midst of a deepening sovereign debt crisis. Why? The increased yields the market is going to force them to pay. The dollar is also falling again and that can hardly be surprising against the backdrop of the Vice President, hat in hand, trying to assure the Chinese that the US is going to pay its debts. We are going to maintain our bearish view for the simple reason that global demand is going to contract further. With the CRB index close to 2011 highs, maybe market participants are viewing risk aversion as holding "real stuff."


Petroleum Tech Talk
 
Oil rallied yesterday to almost reach the 85.00 level, which represents the effect of short term descending resistance off the rejection, last week of the 50% retracement of the recent lows. The intraday bias remains to the downside with steady daily closing below 100.00. The market may receive some support off a possible rising wedge formation as long as trading is contained within the 86.00-89.00 resistance. A settlement above 89.00 is required though to flip the bias back to positive, as it will suggest that the market may have bottomed and targets recent highs near 115.00. We will stay with our lower view until that mark is broken.


Natural Gas
 
Gas prices finished lower yesterday as predictions that over the next six to 10 days pointed to a significant cool down compared and with previous temperature outlooks and diminished expectations of supply disruptions from Hurricane Irene. But while another new low was posted the market was unable to extend for settlement even though record production and a weak economy still weigh on prices. Another consideration, that the storm's path could leave a swath of cooler readings across the Southeast. may help participants push through support. However as the market approaches 3.50, gas could start to pick up market share at the expense of coal, the consequent demand then making lower prices more and more difficult to attain. Prepare for a short term phenomenon that has occurred repeatedly. Strongly bearish fundamentals now clog the market with weak shorts at a market low, creating fertile conditions for covering bounce.
 

Natural Gas Tech Talk  
 
The breach of the previous low at3.855 should open the road lower but ahead downward momentum seems elusive where it should be picking up. A head and shoulders pattern has emerged with the head at recent highs and the neckline at about the recent lows. This is rather unusual at market lows, where one would expect an inverse head and shoulders formation and may be signaling a major drop. A break there, on settlement, could bring a rush towards 3.50 and that is our current target. But a front month close below key support at the 2011 low of 3.731 from early March could drive prices into the 3.40s based on a swing measurement off the sell off from late July.

source: KilduffReport.Com