Written Commentary
CRUDE OIL
The charts in crude oil remain bearish with the bounce off the spike low yesterday rather feeble. The markets continue to be pressured by this week’s announcement of a 120-million-barrel release of strategic oil supply over the next 6 month from a group of countries. Tempering the surprise and sudden increase in supply is a lack of clarity on the US contribution of 60 million barrels as the IEA has not confirmed if the US supply is fresh supply on top of the last US strategic oil release program. The Japanese have contributed 15 million barrels to the added supply with the total consortium of countries contributing numbering 31.
From the product side of the equation, 36 US refiners have applied for exemptions from biofuel requirements which is a positive to gasoline prices. Furthermore, this week’s ARA product stocks all showed declines across all key product lines and that should help keep European demand for US gasoline supported. While the trade is presented with a risk-on environment this morning, unfortunately, overall outside market macroeconomic forces this week and action in crude oil prices have remained patently bearish to RBOB.
NATURAL GAS
Natural gas market’s respect the $6.00 level on the charts this week, fresh new highs overnight, cold weather in the US next week, and fear of late winter season shortages in Europe gives the bull camp control today. In fact, the Russian Yamal pipeline as of last accounts showed gas flowing from Germany to the east.
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