Written Commentary
CRUDE OIL
While a lot of background supply and demand fundamentals remain bearish and will probably re-exert themselves later this week, today’s bias is up because of the hurricane but also because of a surprise massive decline in API crude oil inventories of 9.5 million barrels yesterday afternoon. It is also likely that prices are benefiting from another day of risk on sentiment in global equities, the prospect of further weakness in the dollar, 16-month highs in the Chinese currency, general hopes of positive Fed developments today and from reports that OPEC plus compliance for August was 101%.
NATURAL GAS
On one hand, the natural gas market did reject the early washout yesterday and it is tracking higher this morning off reports that supply is heavily crimped from the storm. However, would-be buyers should be concerned about the market’s inability to rally sharply off the hurricane threat. In fact, given the slow moving nature of the storm, significant flooding projected along the Gulf Coast could result in sustained delays in shipments of natural gas/LNG out of the area and that could work as a negative demand impact.
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