Written Commentary
CRUDE OIL
Like many other physical commodity markets, crude oil made forged a strong opening bid yesterday before falling back in a fashion that hints at a blowoff top. While the May crude oil contract is trading higher today the reaction in the market to news that Chinese state-run refineries are (according to Reuters) shunning Russian oil trading suggest the market is tempering its bullish resolve. Another significant restraint on oil prices in the short-term is the failure of the EU to enact “immediate” curbs on Russian energy imports.
With rising debate about price manipulation by oil sector companies, some speculators are likely to be discouraged from buying gasoline futures. In fact, US oil executives are due to testify in front of Congress today, with a defense centered on the ongoing efforts to boost output, reduced supply from Russia and suggestions that “no one company” sets the price of gasoline.
NATURAL GAS
The sharp gain in natural gas prices on Tuesday was partially justified by moves to end Russian coal exports to Europe, as that will put more pressure on gas generated electricity/heating. A further bullish impact from the coal market this morning came from India where the largest utility expects coal imports to reach 8-year highs. So far, the natural gas market is unconcerned about Russian gas flows halting in portions of Europe, perhaps because gas flow through the Yamal pipeline has been zero for several days.
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