Corrective Action in Petroleum
While the energy markets have managed to discount the lack of evidence of improving physical demand over the last 2 months, it appears that the prospects of an environment conducive to demand improvement is now on the near-term horizon. However, we also detect an increase in the number of bearish issues facing the oil trade this week and we now think the market is vulnerable to the largest correction since the 2nd half of October.
Cushioning prices against a needed technical correction is evidence of a jump in Indian gasoline demand and a prediction that US gasoline demand has now returned to year ago levels.
The natural gas market showed some strength to start the new trading week and has extended that strength again this morning in the face of ongoing weakness in the Petroleum markets.
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