Written Commentary
CRUDE OIL
With a major range up extension in February crude oil to the highest level since the major washout on November 26th, the charts have shifted clearly in favor of the bull camp. Apparently, the crude oil market is not concerned about reports Saudi Arabia reduced February crude prices to Asia by $1.25 per barrel because of signs of softer demand.
With fear of softening air travel numbers after the holiday surge, we suspect gasoline will continue to outperform diesel. We also suspect that gasoline will correlate tightly with action in equities. This week’s Reuters poll predicts EIA gasoline stocks to be largely unchanged with the biggest focus on this week’s EIA data likely to be centered on the implied gasoline demand reading.
NATURAL GAS
With a big range up rally to start the trading week the bear camp has been put on a back foot. US temperature forecasts have turned slightly supportive, and the most recent COT positioning report showed the net spec and fund short in natural gas to be near the largest levels of the last 18 months.
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