Written Commentary
CRUDE OIL
Despite fear of economic headwinds from the virus and choppy action in equities, the February crude oil contract forged a 3-day high overnight. With overnight reports that demand for US products has remained strong despite the surge in omicron infections, that provides some justification for the higher high move early this morning. The American Automobile Association AAA forecasted a 27% increase in US road travel during the holiday period over last year, which would only be 7% below 2019 (pre-pandemic) levels, which gave RBOB and ULSD an additional boost during Tuesday’s action.
NATURAL GAS
Despite surging European gas prices (Dutch prices at record highs yesterday)) US natural gas prices have remain mired in a sideways consolidation. However, US natural gas prices have tightened into a coiling pattern, suggesting a key trend decision is likely at hand in the weeks ahead. In our opinion with cooler US temperatures likely to become more frequent (normal seasonal progression), the natural gas market maintaining a large net spec and fund short, news that Russia has reversed gas pipeline flows to Germany for a 2nd day and given record US LNG exports on Sunday, the bull camp should see fundamental support thicken.
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