Written Commentary
CRUDE OIL
Crude oil and the products were higher overnight, as the commodity and equity markets adopted a positive tone in the wake of a preliminary report out of Israel indicating the vaccines do offer protection against the Omicron variant. Over the near term, internal classic fundamentals are likely to take a backseat to big-picture macroeconomic psychology. Demand destruction is a front and center issue, with many traders unwilling to pick a bottom because of the “negative” price structure due to new concerns of a global lockdown.
RBOB and ULSD have regained upside momentum today, although both remain inside yesterday’s ranges. With the crude oil market showing the capacity to respect its 200-day moving average and the product markets yesterday immediately falling to new lows for the move, it appears that the fear of demand destruction is being quickly factored into prices. Fortunately for the bull camp, the EIA announced that US gasoline consumption in September was up 6.9% from August and up 5% from a year ago. Unfortunately for the bull camp, US gasoline exports dropped to 743,000 barrels per day during September.
NATURAL GAS
Natural gas remains on the defensive this morning, after prices reached a three-month low overnight. While we expect outside forces to dominate most markets, natural gas might be taking its cues from internal fundamentals. These fundamentals remain bearish with temperatures in the US and Europe remaining mild this week before turning slightly cooler next week in Europe.
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