Written Commentary
CRUDE
It finally happened: the high flying energy markets reversed hard yesterday with the markets primarily upended by a resurgence of demand fears in the wake of another very significant one day jump in US coronavirus infection counts. Furthermore with the surge in US infection counts continuing overnight and a fresh lower low for the move early today, traders should expect further declines. Cushioning the market against outside macroeconomic selling pressure is news that Chinese July imports of US crude oil registered a record reading.
NATURAL GAS
The pattern of new contract lows in natural gas has been extended again overnight and we expect to see even more contract lows ahead. Even the fundamental condition favors the bear camp as the market this week was presented with news that US electricity output this week fell 4% from year ago levels which suggests demand recovery for gas remains elusive. Furthermore, with the recent net spec and fund short in natural gas at only 39,000 contracts (compared to the 218,727 contracts net short in January) there would appear to be plenty of technical selling fuel left in the market.
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