IntroView

Markets are seeing some pressure this morning from the paltry job report. Many analysts and commentators are clinging to the upward revisions in the two previous months as a positive sign -- even though these barely break the 100k level. The developments are few out of the G20 meeting and the Greek drama is finally down to playing out the string. Papandreou goes, ultimately, Greek stays in the euro zone, and the Greek people endure years of austerity, until they don't. To be fair, there are some positive signs. We keep hearing from transportation companies, especially rail operators, that freight volumes are up and maintianing a good level. If energy is the first of the commodities to rise in price ahead of a pick up in economic demand, we are seeing that. Copper has also rebounded, but wheat prices remain depressed, down 20% for the year. It appears the various governments are going to hold it together, so it is difficult not be positive on the the markets into year-end.
 

Petroleum Markets        

Shaking off a mostly bearish stockpile report, crude oil responded positively yesterday to an apparent postponement of the Greek referendum, an ECB rate cut and a report that first-time filings for jobless benefits in the US had fallen below 400k for the first time in five weeks. No wonder that a wag at one of the blogs calls this "hope-ium". But even if the global economy is showing hopeful signs of recovery, how long can that last with oil heading to $100? But our skepticism is not going to derail the market's direction. Even this morning's paltry job creation of only an 80k positions hardly budged prices, which while retreating from session highs is still firmly over 94.00, heading to 95.00. With events swirling over Greece, and a G-20 meeting going on, there may perhaps be some profit taking after a generally up week, heading into the weekend. Do not expect the political leadership to come up with any panacea for Europe's woes this weekend. A wag described their efforts to me yesterday as watching a NASCAR event; the cars go around in a circle waiting for the inevitable crash.


Petroleum Tech Talk   

Crude oil broke above last week's high of 94.25 yesterday, and managed to also put up the highest settlement since the recent low at 74.95. With support at 90.50 unchallenged we will have to stay with our upward bias. Prices are still running ahead of the EMAs on daily, weekly and monthly charts, all bullish signs. The next target should be the highs from last August near 102.00, but before that the 61.8% retracement of the 114.83 to 74.95 move at 99.60. For those who have caught the move off recent lows, it does not appear the the ride is over yet. We would be very wary of opening fresh length at these levels as exogenous events remain very fluid and capable of producing extreme volatility.


Natural Gas          

Gas prices showed some strength yesterday despite a bearish EIA stockpile report. Sellers anticipating this event were forced to buy when little downside momentum was generated. But there is little hope for potential bulls after eight straight above average results. Add to that the extended weather outlook and the steep cash discount of 30-40 cents to futures, expectations are for at least two or three more weekly builds which could drive storage above the 3.84 Tcf record high from last November. With inventories on the rise, production running at record highs and milder weather limiting demand, the fundamentals are clearly bearish. Any upside will struggle until colder temperatures force thermostats higher. However, at this time of year, direction could change as abruptly as the weather.


Natural Gas Tech Talk        
        
Even though the short covering rally appears at an end with the rejection of upside resistance and a break of resistance turned support at 3.77, keeps our bias negative for gas. Yesterday's inability to generate downside momentum after a bearish stockpile report show a remainder of strength that may produce directionless range trading. Lack of follow on selling may bring a return of range trading. A breach of 3.978 will be required to to move the bias back to higher. A move to that level after a test and holding of 3.446 support will give the market a very bullish look. Prices remain below the 13-day EMA today and the high, so far, has not come close to first resistance at 3.863.

source: KilduffReport.Com