IntroView
 
Today's the day. President Obama's jobs speech before Congress is tonight, and Ben Bernanke speaks in Minneapolis. Bernanke's speech is set to possibly float new ideas ahead of the Fed meetings later in the month. Yesterday, the Fed's Beige Book showed modest growth in its various Districts, but nothing compelling. More troubling, businesses are bracing for difficult times ahead, instead of preparing for a robust economic environment. The mood in the market is dour right now. What can the Fed really do? What can the President do? What will the Tea Party let him do? The markets seemed prepared for not much, but that is exactly when a surprise can emerge. We shall see. Weekly jobless claims rose, again, this morning, maintianing the 400k+ pace, which yields the zero job growth monthly number. The equity and energy markets have posted some hopeful bounces, and it is difficult to discern which way the policy efforts will break. The volatility has been extreme, and it looks to continue. Playing policy news is very difficult. We do not like to sit it out, but sometimes no trade is the best trade. So, see you tomorrow.
 

Petroleum Markets

Crude oil keeps inching higher. Finishing near the day's high shows some conviction, as well. We find it hard to contemplate how a market with such negative fundamentals can find such strength. Supply is not disrupted or even threatened. The economy is hardly percolating, and so, demand is limp. Additionally, there is a backdrop of flaccid political leadership that seems to have run out of options to deal with it. In short, the market is supported by air. Any financial market that takes directional cues from some other market has to be due for a reversal. Trading of any particular instrument cannot, of necessity, be done by trading another one; especially one as large and as liquid as crude oil. One does not trade crude oil by trading the S&P or the dollar. To be sure, these are influences, but with commodities, where you are dealing with real "stuff" fundamentals eventually have to rule. Do not let the lemmings lead you over the cliff! Maintain discipline, if you can not believe in the rally, do not invest in it; stand aside.
 
 
Petroleum Tech Talk
 
Crude oil's break of 89.90 resistance suggests that rebound from 75.71 has resumed. Prices also settled over the 13-day EMA. But the price action has been choppy, tentative and is corrective looking, current development suggests that a stronger rally may be underway, but we remain unconvinced, so the bias is neutral. Very near term outlook has to be cautiously bullish as long as 83.20 support holds and a further rise could be seen towards 100.62 resistance. On the downside, though, we now need to see a convincing break of 83.20 as a first signal of resumption of fall form 114.83 and should target 75.71 and below.
 
 
Natural Gas
 
Gas maintained its consolidative pattern on Wednesday, even though buyers generated enough momentum to stage an upward break through 4.00. Apparently, several developing storm systems, currently brewing are motivating them. Tropical Storm Maria formed on Wednesday about 1,220 miles west of the Cape Verde Islands while a low pressure system located over the Bay of Campeche has the potential to become a tropical cyclone in the next 48 hours, according to the National Hurricane Center. Only managing a 4.038 high though shows how the importance of Gulf production has diminished as shale production rises and, by implication, the market's inherent weakness. Quite unsurprising, actually, in the time between falling cooling demand and rising heating requirements. A directional cue may come later this morning with the EIA report, where expectations are focused on the probability of a 61 bcf injection. We think the report will show a 64 bcf addition to the 2.961 Tcf already stored.


Natural Gas Tech Talk  
 
Even though an intraday probe above 4.00 occurred yesterday, the market still settled under the 13-day EMA. These offsetting elements are keeping the bias neutral. We think that the fall from 4.983 is still ongoing. Below 3.78 support will extend such decline through 3.731 support towards 3.255 low 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. However, more medium term range trading would still be seen. But the longer it takes to install a new low, the more it will look like a bottoming formation is underway.
 

source: KilduffReport.Com