Written Commentary
CRUDE OIL
While the bull camp will suggest that the recovery in prices this morning is the result of expectations for another large decline in US crude oil inventories, we suspect that the positive action is simple technical balancing from the massive washout yesterday. This week’s Reuters poll suggests that crude oil inventories could decline by as much as 2.9 million barrels.
Yesterday the gasoline market came under aggressive selling pressure in what is likely spillover from weakness in crude oil, but also because of the ongoing demand threat from a 7-day moving average of US infections of more than 70,000.
NATURAL GAS
While the natural gas market has not been tracking with the petroleum complex for some time, it was somewhat surprising that crude oil could forged a $3.40 break without exerting some pressure on natural gas prices. However according to the National Weather Service, US cooling demand last week was 10-degree-days above normal, floating supply waiting for buyers declined by 25% over the last 20-days and the trade is touting the highest seasonal prices ever and that provides natural gas with fundamental support.
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