Written Commentary
CRUDE OIL
Like the crude oil market, gasoline posted a lower low for the move overnight, but has initially rejected that probe. However, Russia continues to suffer from extremely tight domestic fuel supplies, Chinese traffic activity has rebounded following the holiday and the US Fed has indicated a growing economy is as important as fighting inflation. The technical path of resistance continues to point down in gasoline with the gap from the Monday opening more than filled. Like the crude oil market, the charts are bearish, supply news has shifted negative, and the bull camp needs very definitive global risk on sentiment to reverse market direction. In retrospect, the diesel market continues to display the most positive chart action with the market yesterday posting a five-day high and rejecting initial weakness.
NATURAL GAS
When an undersea gas pipeline is deliberately damaged and natural gas prices fail to rally that indicates a prevailing bearish view in the marketplace. However, officials at NATO indicated they will respond if the damage to the pipeline is found to be deliberate. While Germany indicated they would not “relax” with respect to building strategic gas supply the market sees through that bravado with German underground storage caverns reportedly 97% of capacity. Surprisingly, Asian LNG prices firmed overnight despite limited Japanese and Chinese buying. In a fresh longer-term negative Kuwait yesterday indicated they are planning to upgrade infrastructure at the Durra gas field.
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