Written Commentary
CRUDE OIL
While the crude oil market has seen repeated technical and fundamental signs of a shift in sentiment away from the bull camp, the market has also managed to regularly discount those bearish stories. Certainly, the decision to raise output by 400,000 barrels per day from OPEC plus was widely anticipated but that does allow for more supply to come to the market in the weeks and months ahead. However, it should be noted that Russia, since the restraint agreement was signed, has returned 1.8 million barrels of oil to the marketplace and an embargo of oil would be very significant.
While the gasoline contract managed a new contract high yesterday, it also fell back from that high as if the $2.60 level was some form of psychological resistance. However, the trade might have been prompted to bank profits following a 2.1-million-barrel build in EIA gasoline stocks. On the other hand, despite the inflow to inventories of 2.1 million barrels and an inflow of gasoline imports current gasoline stocks returned to a deficit of 2.1 million barrels versus year ago levels. On the other hand, Singapore weekly fuel stocks into February 2nd rose 1.8% on a week over week basis. EIA gasoline stocks rose 2.119 million barrels and are 2.116 million barrels below last year and 4.539 million below the five-year average.
NATURAL GAS
The natural gas market exploded for one of the largest gains ever yesterday and likely drafted nearly all its lift from the ebb and flow of the Russian situation. In fact, US futures prices on Wednesday rose by 15% and therefore a sizable corrective setback is understandable While reports are constantly changing, the latest indicates the Yamal pipeline has been halted completely. Eastern European consumers had hoped the pipeline halt would be a precursor to the beginning of a (reversal of flow) Western flow of gas, but as of this writing it appears gas is flowing eastward again.
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