Written Commentary
CRUDE OIL
The pummeling of the crude oil market continues this morning with the market potentially reaching a psychological support point of $95.00. However, fears of global recession, fears of rising interest rates, Urals crude at a record low of $30.15 and reports that 8 oil tankers from Russia are headed to the US provides the bear camp with many themes. While the US ban on Russian oil has been ordered the law allows for a window of 45 days for pre-existing floating supply delivery. Therefore, it is possible that the world sees Russian supply “in motion” as a temporary supply bridge.
With several governments around the world seeking to reduce the negative impact of high gas prices on consumers and given the retrenchment in gasoline prices since last week’s highs, gasoline prices might be closer to a bottom than crude oil prices. So far, the US, Japan, Brazil, and South Korea have announced intentions to address high fuel prices. In a potential major negative Chinese refinery activity has dropped to the lowest level since late 2020 and that suggests a slackening of Chinese product demand which in turn could result in product exports from China.
NATURAL GAS
After seeing Russian gas continue to flow westward without payment, the gas flow has been shut down overnight. However, prices are lower this morning in a sign that the trade is discounting extreme and sustained cold into the coming end to winter in Europe. Obviously, the natural gas market is also under pressure because of growing global recession fears and perhaps from news overnight that LNG floating supply over the last week increased by 0.8%. In a positive overnight development Chinese January and February electricity output increased by 4% over year ago levels but that news is countervailed by reports that a Chinese oil company would sell April and June gas cargoes to Europe.
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