Written Commentary
CRUDE OIL
Obviously, the news of a 90% effective vaccine shifts the entire fundamental perspective in favor of the bull camp with many weeks of demand destruction fears tempered psychologically and eventually in reality. Therefore, key fundamental and technical reversal action last week has itself been reversed! In fact, recent news of the ongoing powering up of Libyan production is now offset but the question becomes how quickly the vaccine can begin to open-up the economy. However, a longer-term negative was seen at the end of last week following news that US oil and gas drilling rigs in operation last week posted an 8th straight week of gains.
NATURAL GAS
Obviously, the surprise favorable vaccine news has shifted the entire paradigm in natural gas, but the sustained benefit might not be as significant as in other physical commodity markets. Since tropical Storm Eta did not lift natural gas prices last week, the track of the storm away from US production areas should not be that negative to prices. While US gas rigs operating last week declined by one overall, US oil and gas rigs operating are on the rise leaving future supply prospects a negative for gas.
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