Bullish Momentum Continues to Dominate
Even though the February crude oil contract has not forged a higher high in the early going today, prices remain near yesterday’s high in a fashion that suggests the bull camp retains control. However, overnight Asian traffic monitoring systems have registered a softening of traffic which has returned some demand fears to the marketplace. Yet another negative facing the crude oil market this morning is a recovery in Libyan oil output back above 1 million barrels per day. A less critical bearish development came from Russian suggestions that Iranian nuclear talks were going “well”.
Like the crude oil market, the gasoline market this morning has not forged a fresh higher high, but prices remain very close to yesterday’s high. Unfortunately for the bull camp, EIA gasoline stocks jumped significantly this week, they have added 18 million barrels to inventories in two weeks and Singapore weekly fuel stocks increased by 2.1% on a week over week basis. While EIA gasoline stocks rose 7.961 million barrels this week that are now only 4.728 million barrels below last year and they remain 8.591 million below the five-year average.
The explosive rally in natural gas prices yesterday was historical in nature and probably resulted in another significant wave of short covering from a 6-digit net spec and fund short position. Apparently, continued extreme cold on the East Coast of the US provided the brunt of the buying interest, and overnight reports of a reduction in production in Norway’s largest natural gas field should help moderate would appears to be a classic technical corrective setback.
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