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Petroleum Lacks a Catalyst Today


While crude oil prices overnight did not forge a fresh higher high, prices remain close to yesterday’s high despite an extremely negative headline storage inflow of 9.3 million barrels of crude oil into EIA inventories. Unfortunately for the bull camp overall macroeconomic sentiment today is not presenting “risk on”. From a classic technical perspective, the June crude oil contract has corrected a large portion of the oversold condition from the March and April slide of $21 a barrel and will now need fresh positive fundamentals to extend the rally!

Technically, the June RBOB contract forged a higher high and the highest price since March 28th this morning leaving a portion of the bull camp hopeful. This week’s EIA report posted a large decline in gasoline stocks of 3.6 million barrels which some see as a sign that current US refinery operating rates are still insufficient to match demand. Another major bullish development from the EIA report is a record US product export tally which bested the old record by a startling 5.8%. It should also be noted that the EIA posted the lowest distillate stocks reading since March 2014 and perhaps more importantly this week’s US refinery operating rate dropped by a very significant 2.5% which should mean product stocks are unlikely to grow and outpace demand.


With another new high for the move in May natural gas this morning, the uptrend is extended. It should be noted that the fresh contract high overnight was forged in the wake of announcements from Germany and the UK that both countries have enough gas to last into the summer. While reports overnight detail a setback in Asian bids because of unattractive prices, China is facing the potential for power outages from coal generating facilities because of a slowdown in the handling of coal imports.

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