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The Bias is up


While it might go without saying, the volatility in crude oil prices could be massive with the fear of energy sanctions against Russia trumping fears that global energy demand could suffer in the event of a “war” on the European continent. Evidence of the potential for volatility is provided by the $4.00 plus rally this morning and from predictions from the Bank of America that crude oil could fall between $2 and $4 in the event Ukraine tensions moderate. In the near term, the specifics of sanctions and the speed at which the sanctions are implemented hold the key to the direction of crude oil prices. As indicated in other coverage today, the prospect for a quick end to the crisis should not be ruled out with the Ukraine conceding the separatist region.

Unlike the crude oil market, the gasoline market has held the brunt of its range up new high for the move action overnight. Apparently, the world is not yet concerned about a disruption of global gasoline consumption and instead is bracing for a reduction in product exports from Russia. So far, key global players like the US and Europe have yet to announce specific terms of sanctions on commodities. In the near term, the $2.90 level in April gasoline looks to be a key pivot point, with upside targeting from the weekly chart pegged at $0.08 above this morning’s early trade.


Despite the very significant gains from the February low ($0.88) the natural gas market remains net spec and fund short. The Commitments of Traders report for the week ending February 15th showed Natural Gas Managed Money traders went from a net long to a net short position of 6,352 contracts after net selling 41,649 contracts. Non-Commercial & Non-Reportable traders were net short 99,770 contracts after increasing their already short position by 14,783 contracts. While not a significant impact slightly cooler temperatures are forecast for next week through Germany, France, and the European south-central mainland but that cold front is not expected to produce heating degree days above average.

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