While energy demand fears are not a dominating force to start today, infection headlines from Australia and California, weakness in global equities and very disappointing German industrial production readings give the bear camp a slight edge. With the crude oil futures adjusted for the gains since the last COT report was measured potentially at the highest long level since September 2018, the market is certainly technically vulnerable to a slight distraction from the bullish supply and demand views in the marketplace recently.
We remain skeptical of the bull case in natural gas but an extension of much above normal temps throughout the US out to July 20th, lower US lower 48 states production readings and a residually low US rig operating count clearly has the market in a short covering mode. On the other hand, short-term demand from very hot temperatures throughout the continental US certainly provides speculative headline type buying interest, particularly with the hot weather already entrenched over a series of 5 days.
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