Written Commentary
CRUDE OIL
Despite repeated forecasts of rising US production, word of US presidential pressure on Saudi Arabia to stabilize prices, and expectations of a possible lessening of sanctions on Iran crude oil prices are showing noted early gains. However, prices are benefiting from yesterday’s EIA report which showed tight supplies in several key metrics. The most surprising development from the report came from a 4.7-million-barrel decline in crude oil stocks and from another significant drop in Cushing, Oklahoma crude oil stocks.
With expectations for a build in gasoline stocks from the EIA definitively countered by a noted decline in stocks yesterday, a strong US implied demand reading and a significant jump in the year-over-year gasoline stocks deficit, the bull camp has several arguments in its favor this morning. Average total gasoline demand for the past four weeks was up 7.94% compared to last year. Gasoline imports came in at 514,000 barrels per day compared to 433,000 barrels the previous week.
NATURAL GAS
Looking at the charts, one could characterize the natural gas market as a market in freefall. In fact, despite the market’s ability to temporarily reject a sub $4.00 trade, fundamentals do not appear to be strong enough to halt the market from returning to the December and January consolidation bound by $4.00 and $3.50. Apparently, news that Russian gas flow remains reversed, a weaker dollar, definitive risk on sentiment from equities and a 5.9% increase in US electricity output last week (compared to year earlier levels) has been fully discounted by the trade.
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