Written Commentary
CRUDE OIL
Like the equity markets, the crude oil market continues to discount the prospect of energy demand destruction from the unrelenting infection rise throughout the globe. Apparently, some traders think OPEC plus supply will remain restrictive enough to prevent a “resumption of rebuilding of global inventories”. Therefore, ongoing optimism from positive equity market action is very critical to the bull camp which in turn means that this week’s demand readings from the EIA will present a critical junction for the markets.
NATURAL GAS
In retrospect, the massive jump in natural gas prices on Monday appeared to have been overdone and ultimately misguided but another higher high for the move this morning suggests the bull camp has some capacity. In our opinion, it is very surprising that the markets justified the rally by a pickup in US LNG exports and from a very slight increase in temperatures in the latest US forecast. Certainly, US LNG exports posted their first increase in 6 months and there are rumors that China might begin to fulfill its Phase I energy purchase commitment in the gas markets.
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