Written Commentary
CRUDE OIL
Crude oil followed through on Monday’s late rebound with a moderate gain overnight. Global risk sentiment is on the mend, and that has given the energies a boost. There were reports that the OPEC-plus nations had 117% compliance in their output cuts last month versus 116% in October. In the current condition, the ebb and flow of energy demand expectations has become the all-encompassing focus of the crude oil trade. However, with sharp gains in infection rates throughout the world, the threat against energy demand is becoming broad-based. However, a Reuters poll pegs EIA crude stocks declining by 4 million barrels for this week’s report, and that could give sellers some pause for thought.
Both product markets held inside the upper portion of Monday’s wide-sweeping ranges overnight. The nearby RBOB contract thrust sharply lower Monday, but it rejected more than half of that washout in a fashion that suggests traders were unwilling to press prices below $2.08. In general, the RBOB market has been presented with a slight downshift in demand views with activity systems pointing to less traffic congestion.
NATURAL GAS
Natural gas is finding mild pressure this morning, and it continues to see coiling action. This is in sharp contrast to European prices, which posted new record highs overnight. There are reports that a key pipeline has seen flows reverse direction from Germany back towards Russia, but that has that not provided a notable boost to US prices. On one hand, the market tracked near this week’s lows as though a downside breakout was in the offing, but it clearly rejected that downward tilt, perhaps because of a slightly cooler temperature forecast and a potential disruption in supply flows from Norway.
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