IntroView

Late word of Mohamar Qaddafi's killing has had a muted effect on oil prices. There seems to be a feeling of this being a foregone conclusion, but this will begin to stabilize the situation and get more oil on the world market more quickly. The greater influence continues to be the euro zone debt saga - we await the final Greece austerity votes and the conclusive plan around this weekends euro zone summit, neither of which appear assured. It can't be going well, if Nicholas Sarkozy found himself in Germany, while his wife was giving birth to their daughter in France. The German officials have hinted at postponing the summit, and a communique has leaked that does not seem to live up to the hype. Weekly jobless claims remain above 400k, so here we go again hurtling toward a near-zero job increase for the October report. There was, however, some hopeful data in the form of the Leading Economic Indicators and yesterday's Beige Book showed some improvement, as well. But the straw that stirs the drink continues to be Europe. And the German representatives are saying there is no deal to leverage the ESFS or make it into a bank. No deal. No rally. No recovery. -- Sorry for that last part; the Occupy Wall Street folks are rubbing off on us.
 

Petroleum Markets   
     
The latest round of fear has gripped the market as the rift between the major players in the European debt crisis focused traders' attention. Financial markets took a hit late in the session yesterday which carried through Asia and Europe. Despite an unexpected draw to stocks, reported by both API and EIA, and a Fed Beige Book report that said the US economy maintained growth in the past period especially in September, participants remain nervous about the potential European contagion; and well they should be. We do not see this going away. A summit planned for the weekend will certainly not produce a panacea, though investors may take some solace if even a cursory agreement is reached. There is, and will be lots to worry about, particularly as the deadline looms for the "super committee"in the US. A very telling marker is how basic materials related equities get hit on every round of selling. If financial markets are supposed to be forward looking, that speaks volumes about aggregate demand going forward. The only thing that can be said with absolute certainty is that volatility will continue, especially with jobless claims, existing home sales and leading indicators all on this morning's calendar.


Petroleum Tech Talk    

Yesterday's high of 89.69 came very close to overhead resistance before surrendering those gains. Still important support remains intact, even after selling continued through Asia and into Europe. The break of 85.55 minor support argues that the rebound from 74.95 has concluded. Still, we would prefer to see a break down through last Thursday's low of 83.17, which is the point from which the final leg broke upwards, to confirm this. Another break higher should be contained between yesterday's high and early September highs in the mid-90 range. A move above would target the highs from early August in the low 100s. We still favor a move to the mid 60s but until 83.17 is violated we will keep our bias neutral.


Natural Gas         

What is there to talk about when it comes to natural gas, weather and supply right? Forecasts for a drop in the thermometer caused gas to rise to challenge technical resistance, but expectations for another big injection when EIA reports, later this morning, has restrained buyers. We think that it will report that 118 bcf was added to stocks approaching last year's record. The weather will turn colder, that is as inevitable as death and taxes, but will it strain brimming inventories or will winter begin with an Arctic blast? Over the last four weeks more than 400 bcf has been added to storage, and another large injection should be expected next week. If during that time the recent lows are not challenged again it may be safely assumed that the seasonal low is in, but in the short run it is probably safe to play the low against resistance as risk is relatively easy to determine.


Natural Gas Tech Talk   
             
Prices have rejected resistance at 3.64 , but without challenging recent lows agasin. It is probably safe to assume that we have entered a trading range described by those two markers, and why we will keep our bias neutral for the moment. Holding 3.446 should represent a short term bottom and another rise would remain in favor. Above 3.777 will target 3.853 and above. Upside should be limited below 4.143 resistance (61.8% retracement of 4.612 to 3.446 at 4.167) and bring decline resumption. Break of 3.446 will target 3.255 key support level next.So right now we will remain neutral.

source: KilduffReport.Com