PFGBEST Energy Comment

CHICAGO - Jul 2/12 - SNS -- Following is the energy futures comment from PFGBEST Research.

The Energy Report(4)

By Kevin Rosenberg

Crude Oil:

Crude oil futures jumped $7.27 during Friday's session in response to the EU decision to use bailout funds in an effort to aid Spain and Italy's banks. An enormous rally on the back of otherwise poor fundamentals sent the bears running for the short term, but presents great selling opportunity to those with a longer term outlook. A rally larger than any in over 3 years, more than 9%, only puts crude prices at a level we saw just two weeks ago.

Short term optimists have already met reality this morning. Crude oil prices edged lower in overnight trading with concerns about economic growth in China. Manufacturing in China grew at its slowest pace since November, manufacturing PMI dropped to 48.2 from 48.4. The world's second largest economic power is showing signs of continued struggle. As of 7:45 Central Time, August crude oil is trading at 83.70, down $1.25. Downside pressure could be limited in the near term as Friday's EU summit has injected hope and a long planned EU embargo on Iranian oil took effect over the weekend. The ongoing Norwegian oil workers strike should also help lend support. Be aware of any positive economic reports that could support newfound positive sentiment.

Technicals: Today's pivot is 82.86 with resistance 1 and 2 coming in at 86.40 and 87.23 respectively. Support 1 lies at 79.33 with support 2 at 78.49. Stochastics remain strong as does an RSI reading of 48.4. Aggressive bulls could buy breaks this morning above our middle Bollinger Band at 82.33, while the longer term trader might consider initiating short positions on rallies. Be aware of a shortened trading week with the 4^th of July observance.

Reports (All Central time):

7/2 @ 09:00: Construction Spending

7/2 @ 09:00: ISM Manufacturing Index

7/3 @ 03:30: API Energy Stocks

7/4: Independence Day

7/5 @ 07:30: Initial Jobless Claims

7/5 @ 10:00 EIA Energy Stocks

7/6 @ 09:30 EIA Gas Storage

Kevin Rosenberg

PFGBEST Research Team

800.487.3581

krosenberg@pfgbest.com

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