 | NYMEX natty found a bid to start the new week on anticipation that record cooling demand that has engulfed California over the last week will begin to work its way east. Yesterday the front-month contract for Aug’06 delivery closed at its highest level, 6.605 since the session following the summer solstice, i.e. one month ago. Recall, per Friday’s CoT, the funds et al. own 1.3 times more "paper molecules" than physical working gas now in GoM under-ground storage.
 | As of last Tuesday fund managers et al. were sitting atop length of 56,769 contracts and open interest stood at a two-and-a-half month high; so be careful. After all, noncommercial futures length is still only about three-fifths of the May 02nd peak, meaning that the proverbial gun is loaded and the funds obviously have a bullish appetite. We have already tasted $80 crude oil in the winter contracts a couple of weeks back. Therefore, there is no reason not to think we can not do it in the near-term contracts.
 | | Freight rates firmed last week on concerns regarding the reliability of Arab Gulf (AG) supplies given the current war footing. The geo-political premium is also affecting the West African to USGC route. Suezmax tonnage into the Gulf Coast finished the week north of worldscale 150. U.S. refinery demand is strong. Per the latest EIA numbers imports for crude oil, finished products and blendstocks continue to surge, thus lending further support to freight markets. Over the last four weeks crude oil and petroleum products imports averaged 13.7 MMbbl/d, 1.22 MMbbl/d (10%) above the fiveyear normal. As such, freight should firm through the summer into fall. Four and five-month deferred IMAREX VLCC forward freight agreements are trading over ws 200. |  | NYMEX no-lead found a bid on Monday after a rash of refinery outages hit the wires. From the state of Illinois to the state of Falcon (Venezuela), unscheduled maintenance headlines were the bane of mogas bears on Monday.
As far as today goes, bids above yesterday’s 233.00 high print should find a path towards the Aug’06 235.00 life-ofcontract high and the post Rita high 237.00. Beyond here bulls will be eyeing the $2.40 critical point of reference. Otherwise, failure to support the 14-day pivot moving average, 229.67 cautions to further corrective trade back into intra-day support from 227.35 and 224.33. |  | | Despite recent strength, NYMEX heating oil for Aug’06 delivery has closed lower four out of every seven sessions since turning prompt. Thus, spot gallons are more than a nickel below where they were at the end of June, down $2,465 per contract. As far as today goes… bids above last Wednesday’s 198.50 high cautions to further corrective trade into the July 18th pivot range from 199.64 to 202.25. Penetration here will allow bulls to focus in on the 30-week pivot moving average, 205.33. Alternatively, failure to hold yesterday’s 195.45 pivot area low alerts to further corrective trade back towards the day session’s 193.30 low print and last week’s 191.50 low. Failure here sets the table for a flush into the next ratchet of support between 187.40 and 185.00. |  | | Commentary Reserved for Subscribers |  | | Commentary Reserved for Subscribers |  | NAT-GAS… NYMEX nat-gas resumed its downward trend last Friday and has now closed lower in four out of the last five weeks. As far as this week is concerned closure of the June 22nd/23rd gap from 6.480 to 6.570 alerts to follow through momentum and clears a path towards the Katrina weighted mean, 6.612. Penetration here will next likely test $7, then the June 19th/20th gap between 7.050 and 7.060. Above here bulls can then target the next gap, this one from June 16th/19th between 7.200 and 7.300. Alternatively, sellers below last week’s 5.847 pivot area low caution bearish momentum towards last week’s 5.520 low print and the July 07th low, 5.470. Failure here sets the table for continued weakness into the next ratchet of support between the 5.120 weekly low following Ivan’s landfall and the $5 psych-support.
CRUDE OIL… Last week the WTI pit spent the majority of the time retracing from the prior week’s all-time peaks. As such the front-month contract for Sep’06 delivery consolidated in between 76.01 and 74.96. As far as this week goes… offers below last week’s 73.51 low print alert to follow through bearish momentum towards support in between the 14-week pivot movin gaverage, 72.38 and the year-to-date mean, 72.29. We expect to see solid support here. Thus, penetration here clears a path into the next ratchet of support between the Katrina weighted mean, 70.34 and a longer-term mean at 68.50. Alternatively ,bids above 74.80 cautions towards bullish momentum back up against the all-time spot peak, 77.95 and last week’s Sep’09 78.50 high print. Penetration here will then allow bulls to focus on the Sep’09 life-of-contract high, 79.45 and the $80 critical point of reference. | |  | 
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