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Crude Oil Rising Toward 8Yr Highs

CRUDE OIL

With another new high for the move and prices rising toward 8-year highs, the crude oil market continues to show the ability to rotate its focus to the next bullish headline. Apparently, the markets yesterday and overnight focused on the shutdown of a key pipeline in Turkey (the shutdown was temporary) but have also rallied off signs of increased tension between Russia and Ukraine. It should be noted that Russia exports significant energy and energy products to Europe, with primary destinations Germany, Poland, and the Netherlands.

While the gasoline market surged higher alongside the crude oil market in the Tuesday US trade, prices failed to hold the initial pulse up and at times the March contract was trading $0.06 below the high of the day. While the chart action yesterday gave off the impression of a “blow off top” prices have forged a fresh contract high in the early going today which shifts the technical picture back in favor of the bull camp.

NATURAL GAS

While the natural gas market has not tracked tightly with the petroleum complex recently, we suspect ongoing gains in crude oil and diesel prices will begin to exert an upward force on natural gas prices. However, going forward, the natural gas market should be limited by a 7.3% increase in LNG storage levels at US terminals as that could serve to backup supply flow to those terminals.

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