IntroView
 
As we anticipated, the jobs number came in, not near-zero, but at zero. Oil prices rapidly retreated, and gold prices soared. This raises the stakes on President Obama's job speech on Thursday, and the political pressure all around. If the debt ceiling debate had fadedThis reading should also spur the Federal Reserve to undertake more easing measures. The so-called Twist-2 plan should be tried next. This is where the Fed buys longe-dated US Treasury maturities to drive down the rates in the back of the curve. The economic predicament is looking increasingly intractable, and as Bill Gross at PIMCO said, embarking on full-throated austerity right now would "be suicidal." The wheels feel like they are coming off the economic train. And the markets will drift between factoring in the poor economic news and the coming stimulus.
 

Petroleum Markets

Financial markets were unimpressed by the ISM manufacturing index which surprisingly held above 50 in August. In fact, the details of the report suggested US economy is deteriorating and the manufacturing sector still faces a strong possibility of contracting further in September. Investor optimism was further dashed by manufacturing PMI which showed weakness in most of the countries last month. The lemmings, following equities again, initially pushed oil prices higher but then reversed. Failing to break through to 90.00, late session sellers pushed prices back to virtually unchanged by settlement, clearly unnerved by what today's jobs number might bring. Expectations of a +70k increase will not have much of an effect on the discouragingly high unemployment rate in the US and can not give much succor to the misguided bulls looking for energy demand growth in stock prices. Furthermore, the debt crisis in Europe keeps on worsening. N.B. NYMEX closed on Monday in observance of Labor Day.
 

Petroleum Tech Talk
 
The market violated 89.00 resistance again yesterday, but also, again, 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 89.54 yesterday, its highest level so far, 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. Today's reversal through the pivot at 88.67 justifies this conviction. 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. Still, the ascending triangle, defined as the rising trend-line off the 75.71 low to the relatively flat upper boundary suggests an upside breakout and short positions should be stopped out just above.
 

Natural Gas
 
The rapid rejection of the post-EIA high of 4.13, a 9.3% run up in just two days, to under 4.00 again is a clear sign that short-covering was buyers' main impetus. After starting out strong, and posting the day's high just after EIA reported stockpiles fell by only 55 bcf rather than the 68 bcf we had expected, prices collapsed. A 35-cent swing in three sessions was just too far, too fast and suggests the anxiety that is usually consequent to positions being abandoned. The coming storm, which has caused about 2.4% of Gulf production to be shut in may keep prices above 4.00 for today's low volume, pre-holiday session, but participants will probably reestablish bearish stances when they return next week. Non-farm payrolls at 8:30, later this morning, will be taken as a directional cue heading into the new month. The conclusion will be a referendum on whether the economy is reviving. But even if the expected 70k increase is recorded, it is difficult to see how that can be parsed positively for demand.
 

Natural Gas Tech Talk  
 
The market rejected key resistance in the 4.14 area and quickly ducked under 4.00 again, strongly hinting at its inherent weakness. But the break of 4.048 minor resistance on the way up indicates that a short term bottom may have formed at 3.78. This idea is bolstered by the fact that the 100% projection off the measurement of the 4.983 to 4.154 move when taken from the recent high of 4.612 is 3.783. Failure to breach 4.144 resistance though takes some weight away from that conclusion and suggests the downside has more to play out. 4.13 then will be resistance for today, and with the market already probing under support at 4.05, prominently displays the reticence of the bulls.

source: KilduffReport.Com