Written Commentary
CRUDE OIL
In the wake of the current US infection jump, it is likely that portions of the US will see lockdown rules extended into the future again and that should delay or slow the recovery of US energy demand. While Indian fuel demand posted the highest consumption since December 2019 last month, Indian demand is also called into question following a massive jump in infections over the last week.
We think RBOB will need to see demand improvement this week, as the US refinery operating rate has jumped significantly over the last month and without demand improvement inventories are likely to surge.
NATURAL GAS
Over the past 12 months the natural gas market has shown very little upside sensitivity to “risk on” in equities. In fact, the natural gas market has not benefited from periods where the trade thought the virus situation was coming under definitive control. Therefore, the overhang of supply remains very limiting, and it will take dramatic demand improvement to alter the equation in favor of the bull camp.
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