Written Commentary
CRUDE OIL
Given the crude oil rally off last week’s low of $4.00, the breakdown of US stimulus talks, a bounce in the US dollar and a slightly bearish API crude inventory increase yesterday the setback in prices this morning is fully justified. However, a massive hurricane is entering the Gulf of Mexico with that hurricane at times overnight reaching category-4 status! In addition to the deterioration in the demand environment from big picture market developments crude prices enter today’s trade with pressure from a yesterday’s EIA reduction in estimates for the amount of US crude oil production “lost” from the historically low-price shock.
NATURAL GAS
In retrospect, the bull camp in natural gas came away from the Tuesday trade very disappointed, as the upgrade of Hurricane Delta promises to threaten a very wide swath of US gas operations and that should have supported prices. In retrospect, the markets showed little reaction to 2 previous storms this year and some will suggest that is justified given that export terminals were shuttered, thereby reducing demand for LNG. Furthermore, in the end little US production was put off-line for a notable period of time.
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