Supply concerns seem to have trumped weakening demand so far this week in the energy futures markets. Crude oil and reformulated regular gasoline blendstock for oxygen blending (RBOB) traded higher on Monday, due to threats made by Venezuelan President Hugo Chavez-as well as continued rebel activity in Nigeria. Natural gas has sustained its move above $8.00, as frigid temperatures boost demand in the Midwestern U.S.

Crude oil rallied through and settled above near-term resistance last Friday, after trading down more than $4 per barrel earlier in the week. The stocks and inventory numbers for crude oil last week were overtly bearish, in addition to the world equity markets trading much lower last week. This week, however, new supply concerns out of Venezuela and Nigeria have given the market a bit of strength. Chavez has threatened to "join in the U.S.'s economic war" by having Venezuela cut off its supply of oil to the U.S. completely if Exxon Mobile freezes $12 billion of Venezuelan assets. A judge awarded Exxon Mobile this amount in a settlement late last week. Venezuela supplies 7% of the U.S. total oil consumption. And as David Hightower (editor of The Hightower Report) points out, it is the heavy, sour crude that is relatively simple to find elsewhere. It will be more difficult for Venezuela to find a buyer for that oil, which is also costly to produce. The markets reacted strongly nonetheless, April trading six dollars higher between Friday and Monday. On Tuesday morning, it was discovered that Shell will be unable to deliver on some of its crude oil production, because of refinery damage in Nigeria-courtesy of rebel vandalism in the oil-producing region. The crude markets have not reacted as strongly to this news, supporting the idea that the long-term market is still in a downtrend.

April Crude Oil Daily Chart:

RBOB has traded similarly to crude oil, falling most of last week and then higher last Friday and early this week. There are rumors that Iran is moving forward with its nuclear program again, which could cause more military presence in the region and increase tensions. Both crude oil and RBOB seem to have difficulty sustaining upward movement. Market analysts are watching the world equity markets to help determine crude and RBOB direction, which at this point appears to continue to be lower.

Natural gas has seen impressive strength over the past week, rocketing through $8.00 and even gapping higher on Monday. The weather has been supportive to this market, with single digit temperature highs in Chicago over the weekend and frigid temperatures blanketing the entire Midwest. Additionally, with crude prices still above $90 per barrel, natural gas is a relatively cheaper form of energy. Many industries are figuring out ways to use natural gas instead of oil, in order to cut costs. Technically, this market looks as though it has broken above the neckline of a reverse head and shoulders. This, in addition to increased volume on this most recent move higher, suggests this market is looking to retest recent highs at $8.65 and above there at $9.15.

April Natural Gas:

Support/Resistance: