Bullish Supply News For Crude
Given the two-sided action in the crude oil market this week in the face of bullish supply news (lingering hurricane outages and a decline in EIA crude stocks) and given negative demand news it is not surprising that December crude oil has forged a consolidation range of $41.57 and $39.52. Surprisingly, US Gulf of Mexico regulators yesterday afternoon indicated that Gulf oil production off-line remains high at 24% or 439,000 barrels per day but that bullish influence should be expected to wane ahead and the markets will be left with the direction of demand as the primary driving force.
Apparently, the natural gas market saw a wave of buying from a smaller than expected weekly inventory injection from the EIA yesterday. The bull camp is also suggesting that the market is catching a lift from a much below normal temperature area in the upper Midwest, but we are skeptical of the magnitude of support from cold weather in the shoulder season as cold in many areas doesn’t require heating.
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