CRUDE OIL
In addition to an overbought technical condition from the stellar $10.00 October rally in crude oil, the energy trade has faced disappointing US economic data, a bearish crude oil headline inventory number from the EIA and talk of a restart of Iranian nuke talks next month. In fact, the increase in EIA crude oil stocks was the most bearish development of the report yesterday.
The narrowing of the annual distillate and diesel annual deficits in the EIA report yesterday favors the bear camp going forward. We also suspect that disappointing US durable goods for September indirectly undermined gasoline demand hopes.
NATURAL GAS
While the December natural gas contract did not manage a higher high yesterday, it remains in the upper half of this week’s trading range. European prices were undermined overnight because of reports that Putin has ordered the refilling of EU storage, but that headline is misleading as the Russian leader also indicated Russia will fill their storage first.
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