Written Commentary
CRUDE OIL
Despite projections of an increase in US Shale oil production, concerns that China might have accomplished stockpiling and reports of profit taking by energy hedge funds, July crude oil has forged a fresh upside breakout this morning. Clearly, the inflationary environment is pushing some buyers toward the energy complex, but we also think that a plummeting Dollar is fostering foreign buying interest in WTI.
Surprisingly, the stalwart performer in the petroleum complex yesterday was the diesel market with the June contract poised to retest the 2021 highs today.
NATURAL GAS
While some traders suggested that US cooling demand was prompting buying of natural gas yesterday, we find that storyline highly suspicious. However, after a slight disruption in US LNG export movement last month, facilities along the US Gulf are winding up again and given the strong Chinese crude oil throughput last month, one might expect Chinese LNG purchases to continue to surface.
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