Written Commentary
CRUDE OIL
While we think the energy-markets have already factored some portion of a gradual improvement in demand as the world comes out from under the pandemic, it would appear as if those expectations have been rekindled into the opening today. Fortunately for the bull camp, the markets were presented with favorable Chinese economic data as China overnight saw September crude oil production increase by 2.4% over year ago levels which in turn could have dampened Chinese crude oil import demand expectations.
NATURAL GAS
While we have been incredulous with the natural gas market’s capacity to rally recently and remain within striking distance of the 2020 highs, positive Chinese economic data overnight and evidence that Chinese November gas demand is expected to rise 19% on a month over month basis gives significant credence to expectations of strong Chinese LNG imports from the US. Certainly, the natural gas surplus storage situation has moderated from extremes, but inventories last week were still more than 10% above their 5-year average for this time of the year.
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