Written Commentary
CRUDE OIL
At this point we see the threat against US supply from the twin tropical storms in the Gulf as moderated with one storm expected to come on shore well ahead of the 2nd storm. However, the 1st storm is expected to make landfall as a category 2 storm so that leaves some uncertainty in place. While the track of the storms is unpredictable the westward shift and the lack of serious strengthening over the weekend should mean the 58% of Gulf coast shutdowns will be quickly spooled back up by late on Wednesday as the storms moves up into the Mississippi Valley. Another force thickening overhead resistance for crude oil prices is news that crude oil in floating storage remains 270% above year ago levels.
NATURAL GAS
In an extreme amount of volatility, natural gas at the end of last week made a 6-day low and then exploded into a recovery that put prices right back within close-proximity of their 2020 highs. Obviously, news that US Gulf shut-in natural gas production was already in place as of last Friday combined with the likelihood of even more production being closed until the storms pass, provides a strong basis for strength. While the story of strong US LNG exports has contributed a lot to the bull case recently, we expect the tropical storm situation to dominate the first two trading sessions of the week.
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