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A Key Blow-Off Top in Energies

CRUDE OIL

While the crude oil market did manage substantial gains ahead of the hurricane landfall, prices have not extended in the face of damage assessments. A sign of potential weakness, the Saudis are expected to reduce their Arab light oil prices to Asia by a substantial $0.58. Furthermore, there is a looming OPEC plus meeting tomorrow, with the trade expecting the cartel to return another 400,000 barrels per day of supply.

Like the crude oil market, the gasoline market appears to have “overstated” the threat against product supply from hurricane Ida as prices have recoiled significantly from yesterday’s spike high. In fact, RBOB prices are trading lower this morning despite projections that upcoming Labor Day holiday gas prices could reach the highest levels since 2014.

NATURAL GAS

From a technical perspective, the natural gas market action on Monday looks like a blow-off top. Certainly, some production was lost due to the storm, but there were also reports of reduced LNG export traffic. In other words, some demand loss from the storm is a given and that news is amplified this morning by a 5.8% weekly decline in LNG floating supply buying interest.

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