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Higher Equities = Better Demand Views

CRUDE OIL

In addition to a shift back into a definitive risk on market environment, the crude oil bulls are assisted by a chorus of positive fuel demand stories. In fact, there are reports of diesel supply shortages in China, the Biden administration is pushing for a dramatic expansion of truck

drivers and India’s first 15 days of December gas oil sales jumped sharply. It should also be noted that yesterday’s US implied gasoline demand reading was strong. Yet another sign of strong demand came from Bloomberg news global road traffic measurements. Countervailing the strong fuel demand news is a decline in US weekly vehicle miles and a jump in Singapore weekly fuel stockpile readings.

Like the crude oil market, the gasoline market also rejected a probe down and recovered in the face of a shift from risk off, to risk on, following the FOMC meeting results. With nearly 11% of US refinery capacity idled, reports of record driving numbers into the coming holiday, an increase in Indian fuel oil sales and a hot weekly implied gasoline demand reading of 9.4 million barrels per day, the bull camp has regained its fundamental footing.

NATURAL GAS

Natural gas prices regained upside momentum yesterday and went on to post an early rally this morning in a fashion that targets the top of the recent consolidation pattern at $4.085. Indications that Germany may block the approval of the Nord Stream 2 pipeline provided underlying support for the natural gas market yesterday, as Germany may keep European near-term supply at very tight levels.

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