IntroView

The markets continue to embrace optimism even though both Goldman Sachs and IBM disappointed on the earnings front. Ban of America did beat, but there was an awful lot of accounting related gains. PPI readings were hotter-than-expected, which may give the Fed some cover and relief from deflation fears.  Gold, silver and copper are appreciably lower, today, but crude continues to show some resilience to the exclusion of all else, including heating oil and gasoline. Equities are managing to hold gains on the back of the inflation data and more comments out of Germany, which give the euro solution more of a chance. Look for markets to end the day lower, as the gains seem tenuous at best.

 
Petroleum Markets        

Market sentiment soured as participants realized that no panacea was forthcoming to the European debt crisis by next week. How that rationale could have taken hold, after the struggles of the past two years defies logic. Another conundrum that baffled us was why it was ever thought the an export driven economy like China's was going to carry the world out of recession, and that idea has been spiked on recent data showing China's economy is slowing. Showing up across the board in Asia and carrying over through the European session are investors' disappointment. Moody's, who dealt a blow to the US last month, dealt one to France, warning that the country's government finance is at risk due to "the possible need to provide additional support to other European sovereigns or to its own banking system". Where in this environment is there room for jobs to be created or aggregate demand to grow?


Petroleum Tech Talk    

Support at 83.17 is far from being challenged so the counter-trend rally that began off the recent low near 75.00 may not have concluded. Prices for the December contract just barely touched resistance yesterday before selling off. Volume was low and the daily range narrowed again after Friday's active market. There is still considerable resistance just above 90.00 and any rally should be limited to that area. A significant break above, will call notice to a double bottom at 75.00 and suggest the market is on its way back to another test of 100.00. But we will keep our bias neutral until support at 83.17 or resistance at 90.00 is broken.


Natural Gas         

The continuing bearish fundamentals are keeping the rally off the recent lows in check, particularly with another large injection expected on Thursday. Potential buyers are concerned about stockpiles that are approaching record levels after an unusually mild autumn. Storage as of October 7thg stood at 3.521 Tcf, 2% above the five year average and only just 1.6% below levels at this time last year. However, it should be remembered that even with the supply overhang gas burns during the heating season run about 50%, or 30 bcf per day, higher than in summer, which is why seasonal lows are often posted at this time of year. Add to that logic the short positions that accumulate at every lower low and generally cooler weather anticipated for the next two weeks and conditions are set for a reversal. As long as support markers are not violated.


Natural Gas Tech Talk                

Another higher high was posted yesterday, but while some of yesterday"s gains have been surrendered, resistance, now turned support at 3.64 is intact. We will keep our bias for higher as a result. If broken on settlement, it will suggest that the move down from 3.845 has resumed towards our target of 3.255. The first upside target is still reachable at 3.854, the point from where the last leg down broke. Surpassing that mark will open the way to the next previous high at 4.143, and target 4.983. Range trading between the two technical markers of 3.64 and 3.845 could dominate before a discernible breakout, to further confuse the issue but an almost .20 cent range will provide ample opportunities to profit. The bid side of the market will be vulnerable through Thursday's stockpile reports.

source: KilduffReport.Com