Bullish Momentum Dominates Petroleum
Just when it seemed that crude oil prices were stalling and settling into a sideways track, the March contract has forged a new high! Once again, the market appears to be discounting a wave of bearish fundamental news in the form of indications that both the US and China are poised to release additional strategic reserves into the Chinese New Year, a Citi oil surplus forecast, and from news that Chinese 2021 oil imports “declined” for the first time in nearly two decades. Furthermore, crude oil time spreads remain bullish, and the markets overnight were presented with predictions that Indian energy demand will remain strong despite omicron.
Like crude oil, the February gasoline contract has forged a higher high and the highest price in several years early today. Surprisingly, gasoline prices forged the upside breakout despite negative traffic study signals in Asia and in China. Some of the disappointment over softer traffic readings is offset by a decline in Japanese gasoline stocks in the week ending January 8th.
Despite a relatively large weekly draw from storage, projections of a 35% jump in southeast Asia LNG imports, and reduced production in Southeast Asia (Thailand and Australia) natural gas prices have remained under pressure overnight. Furthermore, prices have remained soft despite claims from the International Energy Agency that the European gas crisis is largely being caused by the Russians national oil company Gazprom. There are also views in the market that gas prices will remain underpinned off the “risk of war” between Russia and the Ukraine.
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