Written Commentary
NATURAL GAS
With natural gas prices not finding support from internal fundamentals, the war in the Middle East and strengthening petroleum prices the path of least resistance remains down. In fact, reports that Asian LNG buyers are backing away from purchases because of the recent rally, suggest natural gas prices are in danger of a negative weekly reversal and a quick slide below $3.50. The latest 6-to-10-day forecasts are bearish with above normal temperatures stretching from the Plains and Panhandle west to the Pacific Coast while the mid-Atlantic and southeastern US will have normal to below normal temperature. This will set the stage for below normal heating, air conditioning and power plant demand for natural gas over that timeframe.
CRUDE OIL
Sentiment has shifted back in favor of the bull camp after several days of corrective action and shock from the large API/EIA crude oil inventory build has waned. Another bullish spark is severe tightening fears toward global diesel supply which could become extreme if Iranian product exports are disrupted. In fact, with massive global seasonal refinery maintenance underway and Russia banning some forms of fuel exports, the stage is set for a significant product driven rally in crude oil. Another potential supportive issue going forward is G7 and potentially IMF discussions regarding more restrictive sanctions against Russia which could include an adjustment to the Russian price cap. In fact, this week the US sanctioned two tanker owners for carrying Russian oil above the cap price.
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