Written Commentary
CRUDE OIL
For a change, the crude oil market has failed to make a new high for the move but has respected recent consolidation support between $72.82 and $72.47. However, the crude oil market has not benefited from a very positive sweep of German data overnight and from what appears to be the beginning of a significant risk off environment flowing from equity market gains. While the energy markets have likely remained skeptical of Iranian claims of an impending deal to lift sanctions, the US has not voiced definitive views on the subject yet.
With the gasoline trade fearful of a large jump in gasoline inventories over the last several weeks (because of the persistent increases in the weekly refinery operating rate), seeing a larger than expected decline in weekly RBOB inventories combined with another upside breakout in implied gasoline demand justified the contract high trade.
NATURAL GAS
Despite natural gas falling back from a significant upside breakout yesterday, the market might not be bought out as the last COT spec and fund positioning report showed natural gas to have a net short of 70,958 contracts which is the largest net spec and fund short since March of last year! Reports that a-number-of LNG cargoes are reportedly enroute to Europe could serve to dampen the bullish impact of surging European prices on surging global LNG prices.
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