Written Commentary
CRUDE OIL
In retrospect, the crude oil market has seen a steady shift in a number of fundamentals from bullish to bearish, and yet prices have managed to hold up near 5-month highs. Perhaps prices are seeing some support from the potential for the earliest date ever for the 8th named storm of the hurricane season. From the supply-side of the equation, the market this week saw indications that OPEC would increase production next month, US production was found to have rebounded back to a 6-week high, Chinese port inventories reached a 5-month high and a large Canadian oil company has indicated almost all crude oil production in Western Canada will come back on line by the end of the year.
NATURAL GAS
Certainly, the threat of a supply interrupting storm in the Gulf of Mexico combined with a much smaller than expected weekly injection tally was justification for some short covering yesterday following the large mid-July washout from $1.99 down to $1.6460. However, the smaller than expected injection to US inventories from the EIA storage report could be a one-off (maybe two-off with next week’s report) development from the weeks of much above normal US temperatures. The weekly natural gas storage report showed an injection of only 37 bcf.
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