Written Commentary
CRUDE OIL
While the energy markets last week charged higher off improving demand views and a widespread belief in the market that a global supply deficit remains in place, oil prices this morning are under pressure despite an attack on an Israeli oil tanker. Furthermore, it should be noted that the US has promised a response against Iran because of the tanker attack.
The gasoline market continues to be the stellar performer throughout the energy complex with US gasoline consumption the centerpiece of the bull case. While the US implied demand readings have been improving recently, the primary force likely to drive gas prices even higher is further evidence that gasoline demand continues to outstrip supply.
NATURAL GAS
Even though last week’s technical action showed a loss of upside momentum, the bull camp should be emboldened by a slightly hotter US temperature forecast for the Northeast out through August 15th. Natural gas prices should also be supported because of lower US natural gas production estimates from Bloomberg news, with US production as of August 1st thought to have declined by 1.6 billion cubic feet per day.
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