Corrective Action to Continue in Petroleum
In addition to a pre-existing washout move on the charts, crude oil is undermined as a result of demand fears from the surge in Delta variant infections and from news that OPEC plus has agreed to a supply increase for August of 400,000 barrels per day, with further intentions to increase production by 2 million barrels per day before the end of this year.
Like the crude oil market, the threat of gasoline demand losses could be factored in in the event that US daily infections continue to “grow” again today. At the end of last week, the daily US infection rate was approaching 40,000 after bottoming around 8,000 several weeks ago.
With a 6-day downside breakout last Friday the charts turned negative, but that tilt has been completely reversed this morning. Apparently, the Gas trade is not embracing the threat of demand destruction. It should be noted that the US temperature forecast this morning shows a very large portion of the US above normal, with the areas normal and below normal very limited.
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