Written Commentary
CRUDE OIL
The crude oil market has been “saved” by a shift back into a global risk on environment. Adding into the positive track this morning is the extreme short-term oversold status of the energy complex from last week. On the other hand, the sudden shift to risk on is called into question by a likely extension of a pattern of weak US scheduled data later today and to a lesser degree by looming fears of US Fed tapering.
With the gasoline market last week falling by $0.25 and the EPA recommending reductions in biofuel blending mandates, petroleum products like gasoline have likely made a near-term low. While we suspect that the upcoming US holiday has already resulted in an increase in supply flow toward the retail outlets, brisk demand at the end of this week could add to the potential for a floor under gasoline prices.
NATURAL GAS
With a violent 2-day range at the end of last week of $0.20 and the October contract unable to hold onto those gains last Friday, the gas market looks to remain in a precarious condition. However, while the US temperature forecast out to September 5th has the lowest overall national temperature forecast in weeks there are pockets of much above normal temps forecast for the coming days and that combined with broad based risk-on vibe should give the bull camp some capacity.
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