Positive Crude Oil Action
Despite a negative price reaction to last week’s hurricane, crude oil prices this morning are showing positive action with a portion of that optimism the result of news that Sinopec expects Chinese first half fuel demand to gain over year ago levels despite the protracted virus lockdown. Crude oil is also lifted this morning by favorable equity market action, new lows in the US dollar and a bullish long-term oil market forecast from Goldman Sachs. Certainly, US Gulf of Mexico oil output is recovering but remains below pre-hurricane levels into the beginning of this week.
While the hurricane did not create lasting damage, US Gulf of Mexico oil gas was pulled during the storm event and therefore some of last week’s rally was partially justified. However, we suspect downtime will be limited and production will be quickly revived along with transportation activity. On the other hand, there is another tropical disturbance that is forming off the northeast coast of South America and that could become an issue later this week. The near-term US weather forecast shows a very large area of below normal temperatures throughout the middle of the country, with much above normal temperatures isolated in the Northwest and that in turn should be viewed as a bearish force to start the trading.
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