Written Commentary
CRUDE OIL
In a somewhat impressive fashion the crude oil market has shown positive traction early this morning in the face of bearish external and internal fundamental developments overnight. In addition to news that Japan’s May crude oil imports dropped by 36%, and headlines indicating German crude oil imports in April fell to a 19 month low, the market continues to price in favorable forward demand improvement. However fears from the surging US infection situation and the likelihood of a return to some regional lockdowns could suddenly seize control of prices especially if infections surge today and U.S. equities fall sharply head of the weekend.
NATURAL GAS
The unrelenting liquidation in the natural gas market continues with the likelihood of gas-company failures increased significantly by this week’s price action. In fact headlines regarding below cost-of-production pricing are becoming commonplace and so far that reality has not prompted talk of significant production cutbacks. While the demand side of the equation has been a negative fixture in the market for most of this year, the market did see evidence of a 61% surge in China’s LNG imports from the US last month but that is hardly enough to turn sentiment around.
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