Written Commentary
CRUDE OIL
Reuters overnight carried stories that sum up the consensus in the oil market that tight supply will help prices hold up in the face of fear of slackening energy demand from the infection surge. In fact, a nod to the bull camp on the tight supply situation was given added credence overnight by reports that the Abu Dhabi national oil company will reduce its crude oil volumes for October delivery by 5% to 3 companies in Asia.
It is difficult to determine the impact on gasoline prices in-the-event that the Delta variant infection surge results in a roll back of opening-up in certain portions of the US. Certainly, a rolling back of activity could pull those taking public transportation back into personal vehicles, but that could also dampen economic psychology and in turn erode overall gasoline demand expectations.
NATURAL GAS
In our opinion, the natural gas market has clearly benefited from speculative fund buying, but also from a noted measure of stop loss buying from a recent net spec and fund short of 88,611 contracts. Obviously, seeing a 31-month high on hot weather causes technically based speculative buying especially by funds looking for a hedge against inflation.
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