Written Commentary
CRUDE OIL
Energy prices are tracking sharply higher this morning off chatter that the omicron virus might not present severe health problems. The markets are also drafting lift from the looming beginning of Iranian talks and from comforting Saudi confidence that demand will hold up in the face of the latest variant. Furthermore, crude oil in floating storage declined by 15% in the past week with Asian-Pacific stock levels down by 18% and Europe stocks down by 15%.
Like the crude oil market, the gasoline market managed to reject the spike down move last Thursday but remains within a downtrend formation. With European crack margins soft to end last week, troublesome US daily infection readings and suggestions from the US President that retail gasoline prices are now “falling”, the bear camp has several themes operating in its favor.
NATURAL GAS
With a severe gap down washout to start the new trading week, a violation of the psychological $4.00 level, falling gas/electric prices in Japan and mild/warm temperatures in the US, more declines are likely. On the other hand, further significant losses in natural gas prices could soon result in the highest net spec and fund short positioning since March 2020.
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