Energy Demand Woes
While December crude oil prices this morning have managed to respect the $40.00 level in the face of deteriorating overall macroeconomic psychology, the fundamental bias favors the bear camp. In fact, seeing downward demand revisions from OPEC and the IEA, combined with signs of reduced economic activity in Europe Canada and the UK casts a very negative energy demand shadow in the marketplace. On the other hand, the IEA in a shorter-term Outlook has suggested world oil demand has returned 94% of 2019 levels and that should surprise some traders expecting demand to be much softer relative to last year.
Despite the prospect for a significant expansion in Chinese LNG imports, natural gas prices tracked lower yesterday and remain under pressure today as if an interim top was forged with Monday’s high. In fact, the natural gas market traded lower despite news from US Gulf of Mexico regulators that offshore natural gas production off-line was still 30% as of the close of business on Tuesday. However, it should be noted that offshore platforms were not reporting significant damage and therefore those that remain off-line are likely to come back on-line relatively soon.
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