CRUDE OIL
As in many physical commodities we detect a sense of exhaustion in crude oil prices. In fact, after seeing the inflation story foster Fed tightening talk, a surging dollar undermining many physical commodities and concerning infection rates surfacing in the headlines corrective action is justified.
The product markets continue to falter with fresh damage on the December gasoline chart overnight projecting further declines to the next lower support level down at $2.2424. While the subject of releasing gasoline supply from the strategic reserve has shifted back and forth repeatedly over the last 3 weeks, record high gasoline prices in California are likely turning up the heat on the Biden administration.
NATURAL GAS
The most bullish factor operating in the market is the threat from Belarus to withhold gas supply in the event they are sanctioned by the EU. In fact, the injection of a political supply threat by Belarus (pipelines from Russia to Eastern Europe run through Belarus) is every bit as bullish as cold European weather. Initially the trade feared that Russia would play politics and hold back supply from their pipelines, but it now appears as if the supply disruption threat is further down the chain on its way to Europe.
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