Written Commentary
CRUDE OIL
In retrospect, the crude oil contract might have forged a significant bottom yesterday as the trade managed to reject a significant washout in the face of news that OPEC+ would continue with their monthly oil output increases. In fact, OPEC+ agreed to add “another” 400,000 barrels per day next month in a move that some have suggested is an attempt to get in the good graces of President Biden, but that news did not undermine prices. However, OPEC+ attempted to rationalize the increase in output next month by suggesting more supply and a balanced/growing demand market would not undermine prices.
Like the crude oil market, the gasoline market yesterday spiked downward and aggressively rejected the washout and ultimately regained its 200-day moving average at $1.9775 (it rejected that average at $1.9795 again this morning). In addition to the broad-based risk on environment yesterday, the gasoline market should derive support going forward from news that Mexican gasoline demand in October reached the highest levels in 3 months and from news that China moved to lower official fuel prices.
NATURAL GAS
Unlike the petroleum markets, the natural gas market yesterday broke out to the downside and failed to regain its 200-day moving average at $4.1490. Therefore, the $4.15 level could be a very critical pivot point in the coming sessions. In another major negative development, reports are that natural gas flowing from Russia into Germany has remained stable and will remain stable again today.
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