Most risk asset market are starting the week in negative territory after China's latest GDP number for the first quarter came in at 7.7 percent or 0.2 percent below the fourth quarter level. The market was expecting an 8 percent growth rate. China is the main global economic and commodity growth engine of the world. With China looking like it is also entering a slowing pattern demand for energy and most other major commodity markets is likely to falter and thus act as a downside catalyst for prices. With the rest of the world in a mediocre economic pattern falling oil and commodity prices could be a strong positive for the global economy.

Even as all around it is on the defensive to start the week Nat Gas futures are adding value as the May Nymex contract is now solidly trading above the new $4.16/mmbtu support level. There is not much interference from a technical perspective between the current trading level and the next resistance level of around $4.40/mmbtu. At the moment the technicals are suggesting that the market is likely to remain in the $4.16 to $4.40/mmbtu trading range and should slowly work its way to the upper half of the trading range.

The latest six to ten day and eight to fourteen day forecasts are still showing a very slow movement toward consistent spring like weather. The six to ten day forecast is projecting below normal temperatures for the eastern two thirds of the US through April 24th while the eight to fourteen day forecast is projecting a moderating pattern with the western half of the country expecting above normal temperatures. For the next week or so there will be pockets of both heating and cooling demand which is likely to result in the weekly injection levels underperforming versus the historical data. Overall the fundamentals are still slightly supporting the upward trend in Nat Gas prices.

This week the EIA will release its inventory on its normal schedule and time... Thursday April 18th at 10:30 AM. This week I am projecting the first injection of the season of 15 BCF into inventory. My projection for this week is shown in the following table and is based on a week that experienced a modest level of above normal temperatures during the report period. My projection compares to last year's net injection of 20 BCF and the normal five year net injection for the same week of 39 BCF. Bottom line the inventory deficit will widen this week versus last year as well as the deficit compared to the five year average if the actual numbers are in sync with my projections. This week's net injection will be supportive when compared to the historical data.

If the actual EIA data is in line with my projections the year over year deficit will widen to about 809 BCF. The deficit versus the five year average for the same week will come in around 90 BCF. This will be a slightly bullish weekly fundamental snapshot if the actual data is in line with my projection.

Another week with oil prices losing value as the fundamentals remain biased to the oversupplied side while most of the commodities in the oil complex breached downside support levels last week. With the exception of the spot WTI contract everything else is trading at levels not seen since as far back as mid-2012. WTI ended the week challenging mid-March 2013 levels. At the moment the oil complex does not look like it is ready to start forming a bottom. However, last week's losses in the complex were noticeably less than the previous week which is about the only positive takeaway from last week's trading activity.

The following table summarizes the macro forecasts from the three main agencies that were distributed last week. The IEA, EIA and OPEC all lowered their forecast for oil demand growth for 2013 with the IEA lowered its projection for the third month in a row. The average of the three forecasts are calling for global oil demand growth to still slightly exceed the 90 million barrel per day level with China expected to consume over 10 million barrels per day or about 11.5 percent of the total global consumption level. All of the forecasted demand growth will be in non-OECD countries with China leading the way with a year over year growth rate of 7.8 percent. China remains the main story on the demand side of the equation.

On the supply side of the equation non-OPEC countries are expected to show an almost average 2 percent growth rate with the main storyline on the supply side of the equation coming from the US. US supply is surging higher and is expected to increase by about 6.7 percent with OPEC the least aggressive on their US supply growth forecast. The call on OPEC oil supply is projected to be lower than 2012 in the view of a lackluster demand year and a robust supply year from non-OPEC countries. While China is the demand side story the US is the main focus from the supply side of the equation.

I am maintaining my view at neutral for Nat Gas but with a cautiously bullish bias a long as the spot Nymex contract remains above the $4.16/mmbtu support level. The next level of resistance for the futures contract is now around the $4.40/mmbtu.

I am maintaining my view of the entire complex at cautiously bearish bias as inventories are starting to build and moving the complex back into a supply driven mode rather than a demand led market. Brent has now breached its range support level again with WTI and refined products not faring any better. The complex is now suggesting that the next move is likely to be a continuation to the downside.

Markets are mixed heading into the US trading session as shown in the following table.

Best regards,

Dominick A. Chirichella

Follow my intraday comments on Twitter @dacenergy

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