Possible Petroleum Rally Today
With another upside breakout extension in energy prices this morning it appears as if the markets are uninterested in bearish headlines and the significant overbought technical condition. Obviously, news that OPEC will keep current production restraint levels in place through the end of next month extends what is widely thought to be a continued global supply balancing from what was described as “tank top” last year.
We continue to think the gains in the gasoline market this week are more than justified by the massive reduction in US refinery activity (the lowest ever) as product supply is likely to tighten further.
With the seasonal pattern of warming in the northern hemisphere beginning to gather momentum, a much smaller than expected weekly storage draw and a lack of bullish buzz toward gas prices already in place, it could be difficult for the April natural gas contract to hold above critical pivot point support at $2.70.
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