IntroView
 
President Obama's jobs speech seems to have been eclipsed by everything from the NFL schedule to the terror alert issued for 9/11 observance. Whatever hopefulness the markets were to take from the speech has been snuffed out by concerns, yet again, over Greece's debt situation. The increasing speculation is that the German banks are now pushing for a Greek default and that Germany's Merkel is the last woman standing against one. If it is as unavoidable as some think, then the German bankers have it right: let's get this thing over with. The euro zone is clearly threatened, and the common currency is looking increasingly endangered. The euro has crashed through 1.40 level versus the dollar and more selling is likley. The French banks are the most exposed, and the French bourse is taking the worst of the selling. The markets are in a vicious cycle that will await and drive another resolution via the precipice.  
 

Petroleum Markets
 
Investor fears are on the rise, consequent to the skeptism surrrounding President Obama's jobs plan, and now events in Europe are raising uncertainty, once again. Additionally, EIA revised down its global and US growth forecasts. They now expect US real GDP to grow 1.5% this year and 1.9% in 2012, compared with 2.4% and 2.6%, and global GDP, as weighed by oil consumption, to +3.1% in 2011 and 3.8% in 2012, down from 3.4% and 4.1%, respectively in the prior report. IEA will probably also revise lower its global oil demand estimates for both 2011 and 2012, making them consistent with the deteriorating economic outlook. Hardly surprising then is the Commitments report showing that hedge funds and other large investors reduced their net long position on the NYMEX by 5,780 contracts to 155,837 during the week, through Tuesday. ICE participants almost halved their length. Markets have been under pressure all night, particularly bank shares, as the prospect of a Greek default looms. EU stability appears to be coming apart very quickly and media outlets are even talking about the prospects of a German bolt from the Union. As we have asked numerous times, what is there good for energy demand growth in all of this? Very little.
 

Petroleum Tech Talk
 
Crude oil edged higher to 90.48 last week but lacked follow through buying and failed to sustain above the 90 psychological level. The recovery from 75.71 is so far slightly stronger than expected. But the look of the price actions are still corrective. We are still skeptical of the rally as long as 100.62 resistance holds, but a further advance could come about as long as support above 80.00 remains intact. Ergo. we have to conclude that the fall from above 114.00, commenced in May, is still in progress, but we will keep our bias at neutral until 80.00 is breached, which would re-target the recent low at 75.71 and leave the market vulnerable to further declines.


Natural Gas
 
Gas managed to hold on to only about 1% of the week's gains by the the end of Friday's session. Gas was carried lower not only by changing sentiment relating to meteorological developments, specifically, a change in forecast for Tropical Storm Nate, but also, skepticism over President Barack Obama's economic stimulus plans. Progress made in returning lost production from Tropical Storm Lee also weighed. Approximately 4% of natural gas output remained shut on Friday, according to the U.S. Bureau of Ocean Energy Management, compared to 41.6% of shut-in production on Tuesday and 18.1% on Wednesday. Thursday's EIA report left stocks at 3.025 Tcf, paring the inventory shortfall relative to last year, as well. These next few weeks should not bode well for gas' prospects as cooling demand continues to diminish and heating requirements are still weeks away for most of the country. Add in the nagging imbalances of overproduction, oversupply and constrained economic activity and the fundamentals stay overwhelmingly bearish.


Natural Gas Tech Talk    

Gas technicals offer a more positive view for gas. While continuing in a consolidation range, the peek above 4.00 after striking a new low last week, may lead some to conclude that a bottom is forming. The bias remains neutral this week with further sideways action. Prices fell back under the 13-day EMA again on Friday, and price action, so far today, has been under the pivot point of 3.93, which favors more declines. If prices reverse again to the upside a breach of 4.983 would be required to confirm a move towards a 6.108 target. A more likely scenario though would be a new low below the recent low of 3.78, targeting 3.255 and below.
 

source: KilduffReport.Com