Written Commentary
CRUDE OIL
While crude oil did not hold the initial gains this morning, the November crude oil contract did forge a fresh higher high! With numerous bullish fundamentals presented in the overnight action, it is likely that lower prices (as of this writing) are the result of a short-term overbought condition. While not a major fundamental negative, the API overnight pegged crude stocks to have increased by 951,000 barrels last week, but that negative supply news is offset by reports that weekly crude oil storage in Europe declined by 0.8%.
As indicated in the crude oil coverage today, the gasoline market could also be poised for a blowoff move to the upside as the rate of gain over the prior 5 trading sessions is massive at $0.17.
NATURAL GAS
News that China has “ordered” its importers to absorb surging gas prices and “fix” the energy crunch is likely to fan panic style LNG buying in Asia. Furthermore, promises of “action” from European and UK officials to contain prices has also resulted in a significant upside extension of prices! Even Japan is failing to restrict prices for winter consumption and given exploding prices traders should not discount the potential for hoarding. With the sharp range up move this week in US natural gas, the market continues to factor in very tight winter supply.
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