Written Commentary
CRUDE OIL
With a firm contract high close at the end of last week and a fresh higher high for the more early today, the bull camp extends its control. While we are not sure that La Nina talk is providing significant lift to energies this morning those headlines have fostered renewed “cold winter weather expectations. Bullish sentiment remains high to start the trading week with forecasts of $90 Brent crude oil pricing this week in the headlines early today.
While the gasoline market remains stalled below last week’s high, it has also entrenched support above $2.40 for five trading sessions, and therefore it is possible that the market has reached an interim inflection point. Underpinning the gasoline market going forward is last week’s surprise decline in gas stocks and the significant jump in the year-over-year US gasoline stocks deficit.
NATURAL GAS
While near-term US weather is bearish, the fear of cold in the northern hemisphere winter and Asia has been given fresh credence by an overnight prediction by China that La Nina might put cold weather into China and Japan and other mid-Eastern Pacific Ocean areas. It is also possible that natural gas will draft support from surging Brent and WTI pricing, as that raises the breakeven point for the substitution of natural gas in power production.
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