Written Commentary
CRUDE OIL
While internal fundamental developments might not dominate price action today, the market should garner support from rumblings that OPEC+ might reconsider their plan to bring back incremental supply with each passing month. OPEC+ meets on Wednesday with the cartel indicating it will focus on the omicron strain of the coronavirus. The crude oil market is also likely to find support from a 17% decline in global crude oil in floating storage especially with Asian-Pacific storage down by 24%.
Like the crude oil market the gasoline market has managed an impressive bounce from the Friday washout, with the trade apparently rejecting a test of the 200-day moving average at $1.9725. In a fresh negative supply-side development floating storage of fuel off Singapore has increased by 6% over the prior week. Yet another negative is noted from reports that Chinese state-owned refiners will export more gasoline in December than in November with some projections predicting a 48% month on month increase.
NATURAL GAS
The natural gas market was one of the very few physical commodities to stand up to the prospect of demand destruction from the latest variant of the coronavirus last Friday. However, the January natural gas contract this morning opened in the lower half of the Friday trade and appears to be vulnerable to declines. In retrospect, the gas market could have been disappointed with last week’s EIA report showing the US storage deficit as a percentage of the 5-year average narrowed from 2.2% to 1.8%.
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