IntroView

Yet, another sea change in sentiment grips the global markets this morning. European Central bankers are said to be rolling out a backstop for troubled euro zone debt. The ESFS will be levered significantly to be able to take bail out their banks. This comes on the heels of the weekend's IMF meeting, which succeeded in changing the view of Germany's Merkel about the need for a real rescue plan. We are seeing big reversals in gold, silver and copper. Equities are also building on yesteray's gains. The markets and sentiment cotinue to be fickle. It will only take one reticent EU member (Finland, Slovakia?) to step up and derail these best laid plans. The US Congress passsed on another round of brinksmanship, funding the government through mid-November. We can't hardly wait. Sundaynight's violent action and reversal is being built upon, those weary of tight commodity supplies look to want to buy and probably will. The bottom looks to be in.
 

Petroleum Markets  

Crude oil prices are at their highs for the session as investors express relief that measures expanding the role of the EFSF is a positive sign for energy demand growth, going forward. At this writing, the Greek parliament is debating austerity measures required to receive the next tranche of a bailout. We have always contended that it will not only be difficult to execute domestically, but that it will create problems for the leaders of its benefactor countries. The alternative will be much worse. So, European policymakers have two choices, one bad the other worse. In the US, another debt crisis is approaching, but we feel the Republicans can not afford a government shutdown with the election close and memories fresh from the August debacle. We thought a bounce was probable, after seeing how quickly the market reversed after posting yesterday's low in the Asian session. Directional movements of the slope that last week's move etched out are very difficult to sustain. A movement into the 82.00-84.00 should not surprise.


Petroleum Tech Talk 
 
Crude oil posted a 77.11 low in yesterday's Asian session and promptly reversed once Europe opened. Tracing out a trendline off the August highs through the recent highs near 90.00 exits the right side of the chart near 85.00. There may be some consolidation then in the 82.00-84.00 area, but we will keep the bias for lower though, given the poor global fundamentals. Above 82.16 first resistance targets next 84.11. Reaching that will turn the bias neutral then, and another round of consolidation may ensue. A break of 90.52 resistance is needed to invalidate this view and turn the bias bullish.


Natural Gas  

As we thought, gas had once again become oversold, so a bounce was inevitable. Of course, at this time of year, participants must be aware of a seasonal low being installed coming into the period of increasing demand as the thermometer dips ahead of winter. Those in the high consumption regions will become increasingly aware of this as overnight temperatures dip into the 40s at the weekend in New York. Thursday should be visited by another sizable addition to stocks when EIA reports. Subsequent reports should also remain high, for a few weeks anyway, as the temperate autumn registers in the closing inventory gap to last year. Any attempt for prices to move higher will be difficult to sustain though with production at record highs and the economy still struggling. For the moment then, $4.00 should be a safe sale until significant heating demand starts.


Natural Gas Tech Talk         
 
Despite the 8% slide in the previous seven sessions, the market remains range-bound. A settlement below 3.70 is probably required to open the way lower. This would be a convenient mark for a seasonal low as the calendar would imply. Still, the market is losing some downside momentum again but with 3.859 minor resistance intact, near term outlook remains bearish and current decline is still expected to continue to target a test on 3.255 support next. On the upside, break of 3.859 will suggest short term bottoming and will turn focus back to 4.099 resistance instead.

source: KilduffReport.Com