Crude Oil Supported by China
It is unclear whether or not the Tuesday spike low/double low will be some type of credible support for October crude oil going forward. In fact energy demand concerns remain and there was a surprise inflow of crude stocks from the API. In our opinion to revive the bull track will require a definitively positive headline economic development, a dollar slide and some evidence that China remains a noted prompt buyer. From a longer-term perspective, crude oil should be supported as a result of the Chinese five-year plan which calls for a boost in strategic holdings of energy but that positive is countervailed by what appears to be a Chinese trade action against Disney overnight.
While the natural gas market continues to reject spike low breakouts, damage on the charts continues to extend leaving the bear camp hopeful. However, the $2.40 level in October continues to be regained after two sequential new lows for the move and for some that suggests value has been found at that level. On the other hand, the bearish argument was given an added boost yesterday following an upward revision in the EIA 2020 US natural gas production from 88.65 bcfd up to 89.88 bcfd.
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