IntroView

They just don't get it. Euro zone debt concerns continue to dominate the market -- how many times have we had to write that? We feel like Bart Simpson writing on the chalk board in the opening credits of the Simpsons. The economic damage is growing: Deutsche Bank scrapped their profit forecast for the year; US banks, Bank of America, Citi continue to get pushed lower, and over the weekend the viability of Morgan Stanley was brought into question. There have been some hopeful economic data points, but they have not been enough to offset the euro debacle. Downward pressure will remain on across asset classes, save gold, will likely culminate with Friday's unemployment report. Tomorrow, we will get the much watched but poorly correlative ADP number and weekly claims on Thursday. We are not sure if it is as bad as it gets, just yet.
 

Petroleum Markets  
    
The Greek debacle is coming to a head. Greece's admission in draft budget figures released on Sunday that it will miss its 2011 deficit target raised new doubts over a planned second international bailout. Will policymakers respond? European financial ministers keep meeting in different locations but the outcome is always the same: no decision. The ECB will be meeting on Thursday. This indecision pushed the euro to new lows to the benefit of the dollar which weighed on oil prices. OPEC governor Ali Obaid Al-Yabhouni said there are "ominous clouds on the horizon" for demand because of global economic problems. Be certain, one oil prices approach or break 70.00 you will hear rising commentary from OPEC officialdom about adjusting output. Expectations are that EIA will report another addition to stockpiles tomorrow.


Petroleum Tech Talk    
 
Crude oil's break of 77.11 confirms that fall from 90.52 has resumed and intraday bias remains on the downside for 75.71, which has already fallen, so the 70.00 psychological level is next. On the upside, above 79.64 minor resistance will turn bias neutral and possibly bring consolidation. But recovery should be limited below 84.77 and a break of 90.52 resistance is needed to to turn the bias bullish. Open interest has reversed course and is starting to build, showing growing short positions, and volume was closer to normal as well.


Natural Gas   
 
Gas prices notched fresh lows again yesterday, as ongoing temperate weather had participants thinking that the the usual rise in autumnal heating demand was not forthcoming. The market also fell in sympathy with the rest of global financial markets that are fearful resurgent recession will hit demand and that storage will be full up by the time weather turns colder. EIA data last week showed inventories at 3.312 Tcf, 91 bcf, 5 bcf above the five-year average. It was the first time gas stocks climbed above average since mid-April. Another sizable injection should be reported this Thursday, as well. Warmer than normal temperatures over the high consumption regions should keep any counter-trend, short covering rally, in check. Beware though, seasonal lows are often struck at this time of year.


Natural Gas Tech Talk   
         
The chart has taken on an overwhelmingly bearish look. A channel could not be any more pronounced. Friday's close below 3.70, the first settle below that level in 11 months, coupled with a lower close on Monday leaves the road open for a challenge of our target of 3.583. On the upside, above 3.699 minor resistance will turn bias neutral and possibly bring consolidation. But recovery should be limited below 3.853 resistance and bring a resumption of selling pressure. Still, sliding more than 5% in the last four days with a relative strength index below 30 puts the market in a very oversold condition. For today, prices are well below the 13-day EMA and today's pivot of 3.636, which are both decidedly negative.

source: KilduffReport.Com