IntroView
 
For starters, it is entirely fair to ask ourselves one thing: what the heck was that? We are all now well-schooled in the machinations of inter-bank financing facilities, dollar swaps and their associated costs. It has been the year of the arcane, though, when you consider the focus on the Greek budget and other euro zone actuarial statistics impacting and presaging debt implosion. The reports uniformly note that yesterday's move does not fix the underlying problem of  Europe's debt crisis. They also note that while the markets liked that central bankers were willing to act; they also note the despairing fact that they seemingly had to act. Rumors abound about a major European bank failure looming having spurred the action. Certainly, yesterday was a reminders not to fight the Fed(s). They will act, as will the politicians, after all other inaction fails them. Today, however, reality comes roaring back. Weekly jobless claims jumped back over 400k, and US home prices, overshadowed by the intervention, have now fallen back to 2003 levels. We will take all the help we can get, and the recent economic data, in terms of retail sales and other data, show some improvement. But, with the basic pillars of the financial crisis unbowed -- housing and employment -- it is hard see this as a rally to be believed. The recent rally may have some legs, but, as we have been saying, beware 2012.
 

Petroleum Markets
       
December1st, last month of Q4 and 2011, and the key employment report tomorrow are all good reasons for caution. Participants do not seem timid about holding prices above 100.00 though, which now seems to be a short term supportive benchmark, after central banks took action yesterday to enhance liquidity. This was immediately interpreted as a harbinger of demand growth, propelling prices to the high of the day. A bearish inventory report caused the surrender of some of those gains but the market still managed to settle over 100.00. So far, through the Asian and European sessions, the market has covered no new ground and only briefly dipped below 100.00. While the geopolitical pot simmers with growing pressure on Iran it is somewhat offset by growing production from Libya, where more than half of the 1.6MM bpd pre-civil war output has resumed. There are growing signs improvement from recent economic data as well, but a political resolution to debt issues in Europe and the US remains elusive. It would be hard to recommend opening a fresh position right here right now; prudence dictates standing aside until after the jobs report tomorrow.


Petroleum Tech Talk   

The market will have to maintain itself above psychological support at 100.00 to keep its current bullish cant. If it does, then bulls will probably take solace and momentum should gather. Open interest though continues to contract and given that there has been a $28.00 move over several contract expirations, we have to conclude long positions are closing. With over a week's price action covering $8.00 we also have to assume there are a lot of nervous, impatient longs. Only a break above 103.37 will keep them believing. A close below 100.00 will shake that belief with downward momentum building. There's the stops then 100.00 for length and 103.37 for shorts. The market is above the 13-day EMA but the oscillator is basically flat and the declining open interest bothers us.


Natural Gas       
   
Even though the thermometer has finally fallen towards more seasonal norms, prices are having difficulty building upward momentum, as participants wait for the EIA report, later this morning, anticipating that it will show that totals, already at record levels, will have swollen further. Even the rather small addition of 11 bcf, that we expect, will discourage market bulls, concluding that record high inventories and production will keep the market well supplied through a normal winter. As the mercury dips, demand will be meet and exceeded by the high production that has plagued the market for some time. Elevated inventories, a consequence of weak demand and soaring production have weighed heavily on the market for the last several months. Front-month futures haven't traded above the 4.00 threshold since mid-September, and continue to recover from a one-year low of 3.285 posted on Nov. 21. Stay with length established below technical markers but continue to watch 3.44 as a stop.


Natural Gas Tech Talk
               
The market is trading in a consolidative pattern, challenging neither 3.77 resistance nor 3.44 support, thus we will keep our bias neutral until one side or the other is breached. The rise off the recent low at 3.285 continues, targeting 3.77, the next resistance level which, if breached ,will put 3.934 in the crosshairs. Psychological resistance at 4.00 and the then at the 200-day MA near 4.06, might prove difficult to overcome, unless the fundamentals change structurally. If however, these marks are bested, momentum could extend as far as 4.10 or higher. On the downside, if the market posts new lows below 3.285, then 3.00 could be tested rather quickly. Price action so far has taken place below today's pivot of 3.576, and is still below the 13-day EMA showing the bulls timidity ahead of the stockpile report. Shorts use 3.77, longs use 3.44 as stops, a break of either, on settlement will be required to change our bias.

source: KilduffReport.Com