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Downside Action Ahead in Crude

CRUDE OIL

We continue to see the crude oil market vulnerable to further downside action ahead. First and foremost, among the bearish fundamental arguments are suggestions from the Iranian chief negotiator at the nuclear talks suggesting he expects to see “swift sanctions relief”. The Iranian situation could
be a major impact on the effort to balance the world oil market as analyst think a reduction in sanctions would result in Iran boosting its output by a very
significant 2 million barrels per day.

Like the crude oil market, we see the gasoline market vulnerable to a return to consolidation support left from the 2nd half of March.

NATURAL GAS

As we suggested yesterday, despite bearish conditions it is difficult to recommend short positions in natural gas given the proximity to historically low pricing of $2.50. However, fundamentals remain negative from both supply and demand perspectives. In fact, we see the US temperature forecast out to April 21st as patently bearish, as below normal temperatures in the Gulf states will reduce cooling demand, while above normal temperatures in the Pacific Northwest will reduce heating demand.

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