Written Commentary
CRUDE OIL
Crude oil prices were able to reach a 1-week high early on and improved the charts in the process. In a bullish overnight development crude storage at the main European hub declined by 1.9% on the week and there were reports that US oil was becoming more competitive in Asia. Comments by an economist with the IFO institute have raised concern with European near-term energy demand prospects, while a “risk off” mood in many markets has also been a source of early pressure.
Both product markets are finding early pressure this morning, with RBOB outpacing ULSD to the downside. Like the crude oil market, the gasoline market rejected a key chart level yesterday and managed to rise back above several critical resistance points. The weekly Reuters poll predicts gasoline stocks at the EIA this week to decline by 500,000 barrels, but it should be noted that the gasoline stocks deficit at the EIA versus year ago levels is still roughly 16 million barrels and therefore the gasoline market remains tight.
NATURAL GAS
Natural gas prices are finding mild early pressure this morning but have stayed within a tight trading range that is well above Monday’s 2 1/2-month lows. While the natural gas market spent most of the Tuesday US trade in positive territory, the market was unable to reverse the downtrend in place since the early October highs. To reverse the downtrend since the October high requires a massive rally up to $5.95 today.
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