Written Commentary
CRUDE OIL
There were a number of bearish forces combining to keep pressure on crude oil prices to start this week but instead crude is showing a noted range up move. First and perhaps most importantly, the market is watching China for any signs that they will purposefully foster liquidation sentiment throughout many physical commodity markets.
We think the gasoline market has a bullish demand surprise ahead, as the full reopening of the US pushes up gasoline consumption as people “bust out of isolation”. Furthermore, the northern hemisphere is nearing the kickoff of the 2021 summer driving season with the first “summer” holiday driving weekend looming ahead.
NATURAL GAS
While the natural gas market severely damaged its charts last week and has already seen a high to low washout of $0.29, we are hesitant to suggest the market is oversold or “sold out” yet. In fact, the natural gas trade has shown a preference for a moderately large net spec and fund short positioning (at times above 100,000 contracts) and while the net short in this week’s report is small the market since the report mark off date has declined by $0.13.
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