Written Commentary
CRUDE OIL
June Crude Oil lower this morning on reports of progress in talks between the US and Iran but also on continued concerns that a trade war will pull the global economy into recession and lower oil demand. This follows a rally on Friday that came after the US put new sanctions on a Chinese oil refiner they accused of facilitating the shipment of Iranian crude. President Trump’s criticisms of the Federal Reserve Chairman helped send gold prices to another record high and the dollar sharply lower overnight. In the past a weaker dollar has supported crude oil prices, but global oil traders are skittish about demand on fears that global recession will result from a protracted trade war. The Baker Hughes rig count showed US oil rigs in operation were up 1 rig to 481 last week. This was down from 511 rigs a year ago and below the five-year average of 486. Friday’s Commitments of Traders Report showed managed money traders were net buyers of 41,737 contracts of crude oil for the week ending April 15, increasing their net long to 111,199.
NATURAL GAS
June Natural Gas is fell below the 200-day moving average today after managing to hold it for four straight sessions. The weather is not conducive to strong demand, but then again it usually is not at this time of year. This leaves worries about the global economy to direct the market. The tariff negotiations may lead to more commitments on the part of for US trading partners to buy LNG, but this is limited by how quickly the US can expand its export capability. The 6-10 and 8-14 forecasts show above normal temperatures across most of the lower 48, with the exception of come cooler than normal conditions in California. Much above normal temperatures in the south could spark some cooling demand, but there are also strong chances of rain, which could limit cooling needs. The market drew temporary support from Thursday’s EIA report, with gas storage for the week ending April 11 +16 bcf from the previous week. This was below the average trade expectation of +23. Storage is down 20.9% from a year ago and 4.4% below the five-year average. The Baker Hughes rig count showed US natural gas rigs in operation were up 1 rig to 98 last week. This was down from 106 rigs a year ago and below the five-year average of 118. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 14,457 contracts of natural gas for the week ending April 15, reducing their net long to 5,061.
PRODUCT MARKETS
Friday’s Commitments of Traders Report showed managed money traders were net sellers of 11,131 contracts of RBOB for the week ending April 15, reducing their net long to 16,265, which is back near the bottom of the eight-year range. For ULSD, managed money traders were net sellers of 2,137 contracts, increasing their net short to 8,219.
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