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Bearish Factors in Energies


While December crude oil prices so far this week have managed to respect the $40.00 level in the face of deteriorating overall macroeconomic psychology, the fundamental bias continued to shift even more negative overnight. Supporting prices against a rekindling of demand destruction fear is the fact that yesterday afternoon the US Bureau of safety and environmental enforcement pegged US crude oil production out of commission from the Hurricane at 31% or 568,000 barrels per day.


While the natural gas market did not benefit from the same fundamentals that seemed to lift petroleum prices yesterday it has managed an impressive rally this morning in the face of expanding macroeconomic adversity. Certainly, the natural gas market has not been a recipient of hope for a stimulus agreement but the lack of a stimulus agreement until after the election combined with soft near term demand expectations off mild US weather should have thrown natural gas prices back toward the $3.00 level.

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