Written Commentary
CRUDE OIL
The primary dominating fundamental tilt this morning is “rising supply”, but the bear camp is also touting demand fears from rising global infection counts. Countervailing a slight increase in API crude stocks of 655,000 barrels yesterday afternoon, is word this morning that weekly crude storage in Europe declined by 0.2%. It appears as if the markets are concerned about the potential for a joint US/Chinese release of strategic oil reserves which in turn would likely yank the rug out from underneath all energy prices.
While the charts in the gasoline market are not as vulnerable as the crude oil futures charts the bias is down and solid support might not be found until $2.24 and possibly not until $2.2228. In further negative supply news released overnight, China’s October gasoline production increased by 10.4% on a year-over-year basis with the Chinese government initially focused on rebuilding domestic fuel supplies.
NATURAL GAS
A Russian oil company has suggested that natural gas is headed toward a “super cycle” as coal is replaced with a slightly cleaner source to generate a growing portion of the world’s electric generating needs. Another supportive longer-term development, the press yesterday carried stories about China opening a massive natural gas storage facility and we expect they are attempting to fill that facility quickly. Reports that Polish police were using teargas and that shots were fired on their border with Belarus certainly creates uncertainty around the badly needed pipeline transfer of gas from Russia into Eastern Europe.
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