Written Commentary
CRUDE OIL
The coming trading sessions are likely to be a test of the bull camp’s resolve with fresh energy demand fears accentuated by headlines touting renewed activity restrictions and mandated mask requirements. In addition to rising demand concerns the International Energy Agency has predicted a surplus of global supply beginning this month and extending for a large portion of 2022. It should be noted that the IEA ultimately thinks that cumulative 2022 oil demand will return to pre-pandemic levels.
While the gasoline market appeared to be the leadership market of the energy complex with a fresh 3 week high posted yesterday, macro conditions have shifted in favor of the bear camp. On the other hand, strong holiday orientated driving demand could be stronger than expected if travelers avoid airlines in favor of driving.
An oil pump jack
NATURAL GAS
While LNG on floating storage last week declined by 2.6% and there are forecasts for cold temperatures starting on December 20th, natural gas has damaged its charts early today and is likely to see added pressure from big picture macroeconomic issues. It should be noted that the January natural gas contract filled a gap left by the early December spike down move, that rally failed to hold and therefore the market might be poised to fall to a lower range.
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