Written Commentary
CRUDE OIL
While crude oil surprised the trade yesterday with a noted range up move in the face of a higher Dollar, noted weakness in equities and a minimal decline in weekly crude oil stocks, the head of the market has shifted back to the downside this morning. Certainly, the shutdown of the Colonial pipeline provided crude oil spillover lift from the product markets, but a reopening of the pipeline is underway and that should now apply pressure to the entire energy complex.
With retail gasoline prices surpassing $3.00 per gallon level for the first time in 7 years, and the pipeline re-opening, the reversal in RBOB is fully deserved this morning.
NATURAL GAS
Going forward, we suspect the natural gas market will continue to chop within a range bound by $2.88 and $3.00. This week’s inventory injection is expected to reach 76 BCF, but despite a 60 BCF injection last week, gas inventories compared to the 5-year average fell to -3%. In fact, EIA working gas in storage
has fallen to the 10-year average level and that is significant given that natural gas consumption is rising every year along with expanding US LNG exports.
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