Written Commentary
CRUDE OIL
Once again classic supply and demand fundamentals are being discounted in the energy complex with the markets instead focusing on geopolitical developments in the Middle East. Obviously, seeing pro-Iranian and pro-Saudi forces colliding in Yemen is justification to interject supply threat premium into oil prices. Apparently, the Abu Dhabi airport saw a drone attack which many assume to have originated from pro-Iranian sympathizers in Yemen.
While the gasoline contract ripped into new contract high territory early today, prices have initially retrenched and as of this writing were sitting $0.03 below the overnight high. Certainly, seeing the US average 700,000 to 800,000 daily infections serves to tamp down demand hopes but an energy industry consultancy overnight expects first quarter demand to still outpace supply. In fact, the energy consultancy Energy Aspects expects gasoline demand to jump by 1.4 million barrels per day in the first quarter. Obviously, the gasoline market is also catching lift from the strength in crude oil from the drone attack in the UAE.
NATURAL GAS
While the natural gas market is higher to start today, it is in no way exhibiting the type of upside action being posted in the petroleum markets. Apparently, the bar for bullish weather in the US has been lowered recently as the market has been drafting support off and on over the past three sessions from below normal temperatures in only the eastern quarter of the US. On the other hand, temperatures are cooling in Asia with the market overall just now entering the coldest period of the northern hemisphere winter.
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