Written Commentary
CRUDE OIL
While we are somewhat suspicious of the large rally in the energy complex yesterday, another new high for the move this morning gives fresh confidence to the bull camp and should undermine would-be sellers. Furthermore, a return to bold risk on in US equities yesterday and a $100 crude oil price forecast from Bank of America probably sparks ongoing bargain-hunting buying by specs and funds.
We continued expansion of US refinery activity, which in turn should create the potential for a significant narrowing of the annual deficits in gasoline, distillates, and low sulfur diesel stocks. With a noted increase in the US refinery operating rate again this week, activity could be the highest in 19 months and the activity will be significantly above the five-year average for this time of the year.
NATURAL GAS
With a failure at a critical level on the charts yesterday ($3.20), the gas market seemed to discount expanding above normal temperatures in the western half of the US. However, a cooling off in the Eastern half of the US leaves overall US temperatures average for the nation.
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