IntroView

Like the small legion of Wall Street protestors in Lower Manhattan, the markets got maced Sunday night into Monday. Gold, in particular, collapsed under $1600 per ounce, but has sinced rallied back over$1625. There seems to be a bid in markets across-the-board developing, at least for this morning. Those pesky ECB technocrats  are back in Greece this week to finalize the next stage of the bailout, and Greek lawmakers have tough vote ahead of them. US lawmakers also have to reach agreement on disaster aid, among other issues, to avoid a government shutdown -- sound familiar? It should. The elements of volatility abound, and look for another rough week. The violent overnight action may argue for a bottom having been installed for now.
 

Petroleum Markets   

The pledge, late last week, by G-20 policy makers of "a strong and coordinated international response to address the renewed challenges facing the global economy," rang hollow as the World Bank/IMF meeting, over the weekend, broke with them still divided over what to do. Stocks in the Asian session declined and European markets, pressured at their open, have recovered early losses but remain depressed. In the commodity sector, oil prices remained under pressure, as does gold and silver. In Greece, a fresh round of strikes gripped the country in protest against new budget austerity steps. As we thought, CFTC reported a decline of speculative length in the Commitments report on Friday. In a blinding glimpse of the obvious, the IMF stated, "the global economy has entered a dangerous phase, calling for exceptional vigilance, coordination and readiness to take bold action." Unfortunately, no such response appears to be forthcoming. This will get worse before it gets better, and with China's export-driven economy showing cracks, does not bode well for energy demand growth.
 

Petroleum Tech Talk  

Crude oil dropped sharply to as low as 77.55 last week and that development and today's post of 77.11 in the Asian session, affirmed the case that consolidation from 75.71 is finished at 90.52 and the whole decline from 114.83 is resuming. Bias remains on the downside this week with 82.21 minor resistance intact. Retest of 75.71 should be seen first. Break will target 70 psychological level and then 100% projection of 100.62 to 75.51 from 90.52 at 65.60. On the upside, above 82.21 minor resistance will turn bias neutral and should usher in another consolidative phase.


Natural Gas

Gas finished the week without posting another new low for the move for the first time in several sessions. Still, mild autumn weather across most of the country was expected to limit demand. Northeast temperatures should average above normal this week, while the Midwest experiences mostly below seasonal readings for the period. So far today, gas appears to be somewhat immune to the sell-off that is plaguing not only commodities, but most asset classes. The gas market has its own long term deficiencies. With demand fading, production running at record highs and the economy still struggling, there is little upon which to found upward expectations.However, the inability to post another new low, may be indicative of another oversold condition building, but if it is contained below 4.00 downward momentum should reappear rather quickly. Prices often reach a seasonal low in October, when mild weather reduces demand, before recovering in the winter, when heating-fuel use peaks, and it is possible, that inflection point has been reached.


Natural Gas Tech Talk          

The market hit its lowest level since late October on Thursday. Even though the fall extended to as low as 3.662 last week, a temporary bottom may be building right at 3.70 which keeps the market in the recent 3.70 and 4.15 range that has bound trading for the last seven weeks. Still, with 3.859 resistance intact the possibility of a test on 3.255 support remains extant. A settlement below 3.70 is probably necessary to keep the downward momentum going. A short-covering rally that extends to 4.15 could ignite more buying. Further downside will be difficult though as the lower end of the trading range has not broken down convincingly yet.

source: KilduffReport.Com