IntroView
 
Yet, another volatile day across the markets due to what has become the repetious ebb and flow of angst over euro zone debt. Short-term Greek interest rates continue to soar, and several of the large European banks, such as France's Societe Generale look worse by the day. Somehow, investor jitters continue to calm just as markets near the precipice. Gold rose above $1900, again, and has fallen about $70 an ounce. In the US, Republican Presidential candiates hold a debate tonight, ahead of President Obama's speech before Congress tomorrow night. The markets do not appear to be expecting much from either event. Things could get interesting from the Federal Reserve, however. There is increasing speculation about the so-called Twist operation, where long-dated Treasuries are purchased. Interestingly, one analyst has specualted that issuance of a 50-year bond could cut interest costs by $1 trillion. That could shake things up. Yesterday's lows look they could hold for some time, representing a decent floor ahead of the coming efforts from Washington and Europe. Finally, the German Supreme Court ruled that monetary efforts for Europe by the country are constitutional. That is helping this morning.
 

Petroleum Markets

Oil has been supported in the European session, posting a high of 87.42 before retreating. October futures slumped to as low as 83.2 yesterday but then staged a rebound and ended the day at 86.02. Sentiment has improved somewhat on rumors that the Chinese government may ease monetary policy on reduced inflationary pressures and on news that debt-ridden Greece has pledged to accelerate austerity measures so as to secure international funding. Germany's top court rejected challenges to the country's participation in the Eurozone bailout plan which also eased concerns. Obama will reveal a $300B job-creating stimulus before the Congress tomorrow. Measures are focused on tax cuts, infrastructure spending and assistance to local governments. The media said measures will include a 1-year extension of payroll tax cut for workers and an extension of expiring jobless benefits. Nothing new or innovative there. Desperate investors' hopes will be dashed not only by the lack of bold initiatives, but also by Republican intransigence to anything Obama proposes. Look for a replay of the debt ceiling debacle as the inexorable march to $60 continues.


Petroleum Tech Talk
 
Crude oil held secondary support at 83.38 yesterday, extending to only 83.20 before reversing. We' still hold that consolidation from the 75.71 low has finished at 89.90, and the move down from 114.83 in early May has resumed. A break of the 75.71 support will confirm this. A reversal and sustained trading above 90 will shift the bias and target 114.83 Current decline should target next key cluster support at 64.23 where a base should begin to support a break higher back to 114.83 and possibly higher if fundamentals agree.
 

Natural Gas
 
Now that a brief bout of short covering has apparently concluded, the current round of buying will look to many like a bottoming formation. But that is not the case. Finishing under 4.00 certainly points out the market's inherent weakness. Of course, traders are keeping a close watch on three other low-pressure systems under development and temperatures in key gas consuming cities were seen a mix of above and below normal for the next six days, but highs in the low-80s in New York and Chicago are hardly going to create a bullish effect on supply. Most importantly, with lows struck only just under $4.00 it is psychologically difficult to open a fresh short too close, and that is the crux of support. And, like most financial markets, gas futures are waiting until tomorrow night to see if the President comes up with any surprises.


Natural Gas Tech Talk  
 
Settlement was just under the 13-day EMA on fairly good volume and a little wider daily range than average are looking like the first signs of a bottom. In truth, it is an extension of consolidation that occurred after last short-covering rally the second week of August. So gas is still bounded in range of 3.78/4.13 so far, and intraday bias shifts to neutral. The fall from 4.983 is possibly still in progress, but shorts will now require the reassurance of a new low for the move. Below 3.78 support will extend such decline through 3.731 support towards 3.255 next. On the upside, however, break of 4.13 resistance will in turn argue that fall from 4.983 is over and stronger rebound should then be seen to 4.612 and above. While we think this unlikely, we would be remiss in not pointing out the potential.

source: KilduffReport.Com