Written Commentary
CRUDE OIL
While a risk on environment is in place this morning, crude oil inventories tightened again this week and demand improvement has been documented for gasoline this week, the bull camp in crude oil has seemingly lost its dominating stance. In a positive development Chinese crude oil stockpiles on the week have declined to the lowest level since early February, but that might be a function of China pausing or slowing its imports because of maintenance.
Surprisingly, gasoline prices are not extending on the upside this morning in the face of risk on in US equities and in the wake of reports that there have been gasoline shortages in 6 US states. It seems as if a leadership change has taken place within the energy complex with the gasoline market showing relatively impressive action versus crude oil and ULSD yesterday.
NATURAL GAS
In our opinion, the natural gas market forged its upside breakout yesterday off warm temperatures in the US and Europe, but also because long-term chart pivot points were taken out. In fact, some fund managers might now see natural gas as a potential hedge against inflation.
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