Written Commentary
CRUDE OIL
The crude oil market continues to be one of the strongest physical commodity markets with prices yesterday grinding higher in the face of a stronger dollar, a “risk off” mood in equities and in the face of noted weakness in product prices. On the other hand, the bull camp has now seen 4 weeks of declining crude stocks and a consistent march higher in the US refinery operating rate which suggests that both supply and demand continue to support the bull case.
With divergence between crude oil and product prices extending into a 6th straight trading session today, the trade clearly thinks US product supply is and will continue to recover faster than demand will improve.
NATURAL GAS
With natural gas forging a new high for the move and then reversing aggressively from that high, the chances of a blow off top have increased. In addition to moderating US temperatures, the natural gas market this morning is under pressure as-a-result of headline coverage touting a rebound in global coal use, due to tight supplies in some areas. In fact, Europe has reported increased coal use which has been magnified by an extension of extremely hot weather there.
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