IntroView
 
The minutes of the August 9th Federal Reserve meeting, released yesterday, exposed a deeply divided group over what to do next. Like the political environment on Capitol Hill, some members want to do virtually nothing more, while others want to do all in the Fed's power. The diminishing economic outlookl looks to spur a middle ground of further measures in both places, and the markets, generally, embraced the prospect of more Fed machinations. The plunge in consumer confidence on the heels of the fabulous debt ceiling debate challenges the political strategy of intransigence. Although, some Tea Party members are demanding offsetting cuts for any increase in FEMA funds to assist with Hurricane Irene and the other slew of natural disasters affecting the US this year. The policy debate should be full-throated again, when Congress returns and the President rolls out his much touted speech outlining his plan for economic revival. The jobs data starts to roll out today; these data will surely frame the debate further. (Editor's note: Hurricane Irene has proven terribly disruptive. We thank everyone for checking in and their good wishes. It's good to be back)
 

Petroleum Markets
 
Prices spent the Asian session little changed, but the European session began a rout that may produce the sharpest monthly drop since May on signs the global recovery is faltering, even as prices head for a weekly gain Recent data from global economies is showing that the sluggish growth pace more likely will continue and the political response remains muted and inconclusive. Yesterday, US consumer confidence slipped to the lowest level in two years and European economic confidence fell the most since December 2008. Additionally, EIA reported that crude supplies rose 5.13MM bbls providing evidence that demand on oil from has weakened. And production from Libya is predicted to come back in the coming weeks. Crude was also carried higher yesterday on the mistaken belief that a potential for QE3 push interest rates lower, weighing on the dollar. We suppose that is why gold was higher as well. would find funnel additional capital into equities. Apparently, participants wanted to cover all possibilities. That never works.

Petroleum Tech Talk
 
The market violated 89.00 resistance yesterday, but did not settle above that mark. That, and price movement so far today, represents another rejection of the 50% retracement of the move down to the mid-70s, earlier in the month. The hesitant recovery to 89.00 took out 89.21 yesterday and this should have turned the bias positive, but failure at 89.61 support turned resistance will keep us bearish as long as this resistance holds and today's reversal through the pivot at 88.19 justifies this conviction, so far. A break below weekly support at 82.17 will create an overwhelmingly bearish picture, which should keep the drive to the 75.71 low alive with an eventual target of 70.00.
 

Natural Gas
 
Events have conspired to bring about the short covering rally we predicted. A storm brewing out in the Atlantic, now named Katia, caused traders to reject the six-month low at 3.78, posted earlier in the session. The question now is, how much momentum it can produce. With with summer winding down, production at record highs and demand lagging in a weak economy, probably not much, but that is really in the hands of Katia and the weatherman. So far 4.00 seems resistant but buying could extend as far as last week's high , just over 4.00. Unless the storm builds to Katrina-like proportions, this should be seen as a selling opportunity, particularly with demand down almost 3bcf as a consequence of Irene's passing. Look for stockpiles to have risen by 68 bcf this week.
 

Natural Gas Tech Talk  
 
Prices have broken below our descending triangle, as predicted, into a well-defined trend channel extending back to the mid-June highs. One of the most basic signals technicians use is a new low with a higher close and that is what price action produced yesterday. Prices have been probing the downside after trading mostly sideways during the previous three weeks. The new low yesterday is pointing to exactly where the market should go once this bout of short-covering concludes. The bearish break of the descending triangle potentially projects a move to the 3.40s, particularly if support at 3.73 is violated.

source: KilduffReport.Com