Written Commentary
CRUDE OIL
It would appear as if the crude oil market is in the process of coiling even tighter as if a key trend decision is in the offing. However, it should be noted that API crude inventories fell by 4.3 million barrels overnight which was much larger than analyst expectations. On the other hand, crude storage at the ARA increased 4.1% on the week, US/Chinese trade relations took a negative turn overnight and there is fresh energy demand concerns from many universities forced to revert to online because of the failure to social distance. Another minor pressure for prices was seen with weakness in Asian cargo prices as Saudi Arabia continues to aggressively compete for business in the region.
NATURAL GAS
The upside extension in natural gas prices to the highest level since May 2019 suggests a major fundamental and technical low has probably been posted. In fact prices this morning remain near the recent highs despite a growing chorus of views that the rally is premature and overdone. Part of the strength in US natural gas prices is the result of talk of shortages in Asia which combined with a sharply lower dollar is increasing expectations for US export sales.
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