Written Commentary
CRUDE OIL
The energy markets fired sharply higher yesterday reportedly because of evidence that Gulf Coast and Gulf of Mexico oil producers were still struggling to bring back production as quickly as expected after initial damage estimates. In fact, US Gulf Coast officials suggest that a very large percentage of Gulf production remains offline today. Offshore facilities skirted damage as result of the storm traversing oil fields at less strength than was present at landfall.
While both product markets lost strength late in the day yesterday, RBOB and ULSD saw their highest closes since late July and have extended those gains this morning. The product markets should enter today’s potential volatility window with support from declines in weekly European gasoline, gas oil, fuel oil and naphtha stocks.
NATURAL GAS
From a fundamental perspective, the bias in natural gas remains up while the technical condition is flashing extreme overbought readings. We assume that today’s US nonfarm payroll report will have a fleeting impact on natural gas from a demand perspective, but gas can probably continue to rally with a middle of the road payroll figure.
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