Crude Oil Vulnerable
While the November crude oil contract continues to respect 6-day lows again this morning, we are concerned that bearish fundamentals are adding up and we would not be surprised to see a very poor finish to the week. In fact, it would appear as if concerning equity market action this week, further evidence of slowing US recovery momentum, extremely low US refinery operating rates and returning US Gulf of Mexico production (lost to the 2 storms) are set to overwhelm generally bullish inventory readings from the EIA this week.
Clearly sentiment toward growing LNG demand is being embraced by a larger portion of the gas trade, with the December gas contract soaring this week and forging a higher high this morning. The bullish argument that US natural gas exports are set to expand to China was given significant credence by a prediction overnight that Chinese LNG imports are on track for a new record.
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