Written Commentary
CRUDE OIL
The outlook for energy prices today is bearish with a negative macroeconomic shift overnight, an upward revision in a US oil production forecast and predictions from the IEA that a vaccine will not lift demand until late next year. Adding to the bearish fundamental information flow this morning is an initial claim by Iran that their exports reached 700,000 barrels per day and fresh fears of supply flow from Venezuela. While crude oil prices extended their upside breakout yesterday and reached up to the highest price levels since early September, they quickly relinquishing those gains and settled back in a fashion that could be-seen-as a temporary overbought reaction.
NATURAL GAS
While we think January-natural gas will continue to build solid consolidation low support around the $3.00 level, we will not rule out temporary probes below that level in the coming sessions. In fact, tropical Storm Eta is currently not a major threat (given its lack of strength and easterly track) and US temperatures are not extreme enough to surprise the trade with a sharp jump in heating demand in the north and significant cooling demand in the South. On the other hand, it should be noted that US weekly electric generating power increased by 4.4% last week compared to year ago levels.
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