Written Commentary
CRUDE OIL
While the January crude oil contract has not forged a higher high for the move early today (as of this writing) the bias from the charts remains up and hopes for improved demand remain in the market. Underpinning the bull case is yesterday afternoon’s decline of 3.1 million barrels of crude in the API report, weather related shipping delays from Black Sea ports, further massing of Russian troops near the Russian/Ukrainian border and reports of a 10-million-barrel Brent crude oil long option trade. In a modest negative demand development, the EIA yesterday released its forecast for 2021 crude oil production with a downward revision in a previously forecast decline in output.
With a fresh higher high this morning following a gap up range up thrust yesterday, the path of least resistance remains up in RBOB. Unlike other sectors of the petroleum complex, the rally in gasoline yesterday was forged on significant trading volume, which in turn gives confidence to the bull camp.
NATURAL GAS
With an extension of the risk on favorable vaccine inspired environment, the natural gas market has ventured back into the gap down zone left by Monday’s washout in a fashion that suggests short covering and fresh buying is surfacing. Adding to the upward track is a sharp jump in British and Dutch wholesale gas prices for next day delivery and reports that Russia continues to amass troops on the Russian/Ukrainian border.
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