CRUDE OIL
With a 6-day low early today, the oil trade is reportedly growing suspicious toward ongoing demand improvement with some analysts now indicating refinery activity is running ahead of demand reality. Perhaps growing headline coverage of Delta variant infections is questioning demand, or it is possible that this morning’s weakness is simple technical follow-through from yesterday’s key reversal.
Like the crude oil market, the gasoline market appears to be settling into a near term corrective track. However, trade expectations for this week’s inventory report call for a modest decline in gasoline inventories and that in turn should help underpin nearby prices above last Friday’s washout low of $2.1928.
NATURAL GAS
While the northwestern US and Europe have provided demand lift for several weeks (because of record heat), we suspect that fund buying is beginning to dominate the natural gas market. However, supply side news is also lending support with weekly LNG on floating tankers declining by 7.2% over last week. Other supply-side support is seen from tight supplies in Europe which in turn has reportedly pushed up international gas prices sharply.
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