Written Commentary
CRUDE OIL
In retrospect, the $65.00 level appears to have become a key value zone in the September crude oil contract. However, determining the upside value zone is more difficult with our suspicions pointing to prices just above $70.00 at $70.81. While some in the marketplace feel OPEC+ will release more oil on the world market consistently over the coming months, OPEC sources indicate that they fear more shale oil supply hitting the market and there is concern within the cartel that the latest infection wave from the Delta variant will undermine demand and therefore they intend to be very cautious.
While seasonal demand should continue to support gasoline prices, the gasoline market (like many other physical commodities) must monitor the daily infection count closely for signs of renewed restrictions on activity.
NATURAL GAS
Obviously last week’s larger than expected injection of 49 BCF combined with a significant moderation of much above normal temperatures in the US leaves the natural gas market in a vulnerable position. In fact, the temperature forecast now has a very limited region of above normal temperatures situated in the desert Southwest to the end of the month and that is apparently not enough to support natural gas prices at $3.90.
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