Written Commentary
CRUDE OIL
While crude oil has maintained a very uniform uptrend channel since the late May lows and Goldman Sachs has indicated $100 crude oil pricing is possible, the bull camp should expect to see increased volatility over the coming 36 hours of trade. In other words, the energy markets will have at least a passing reaction to any change in US Fed policy tomorrow, but in the near term the bull camp is bolstered by reports that Russia has increased its crude oil export duty and that the Chinese recovery is prompting very significant gasoline consumption.
Apparently, road miles driven is growing steadily in the US, China, and portions of Europe. In fact, overnight the trade was presented with evidence that Chinese road activity has returned to pre-Covid levels. However, we get the feeling that the gasoline market is expensive, more supply is flowing from a return to normal refinery activity and opening-up demand has been largely factored by the recent high of $2.2365.
NATURAL GAS
Apparently, the natural gas market is beginning to catch delayed spillover lift from strength in crude oil and petroleum prices in general, perhaps because natural gas versus crude oil in terms of BTU pricing recently reached the cheapest level in modern trade. There were also reports Monday of a potential problem at a French-managed Chinese nuclear power facility and that could force China into the purchase of alternative electricity generating feedstocks like natural gas.
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