CRUDE OIL
Fortunately for the bull camp the petroleum markets have already corrected a significant portion of the massive rally over the prior three days as today could bring a serious downgrade in global energy demand prospects. However, this week’s EIA data supported the global tight supply theme which Russia added to yesterday with an announcement they have no plans to raise crude oil supply to stem surging domestic fuel prices. On the other hand, a consulting firm yesterday predicted the Saudis may moderate oil cuts sooner than expected because energy costs to consumers are surging and more inflation means more central bank tightening and increased chances of a return to recession. While Saudi Arabia claims they want to “keep the world oil markets balanced”, they usually err to the side of higher prices. In today’s action, the focus of the trade should turn to demand prospects with the US facing potential major financial market volatility if an agreement on the government budget is not finalized.
NATURAL GAS
The bull camp should be heartened by the capacity to close higher and extend higher today in the wake of a top of the range weekly storage injection. Total storage stands at 3,359 bcf or 6.0% above the 5-year average. US temperatures are moderating in 8-to-10-day forecasts and the surplus to the five-year average stocks level increased this week breaking a long string of weekly narrowing of the surplus. Reports that Norwegian gas exports to Europe declined by 6.4% were the result of maintenance disruptions and not a sign of flagging European demand. From a longer-term perspective, the Russian national gas company Gazprom yesterday announced their gas supplies were down by 26.5% year to date in the first half of 2023 as that could work through the system and begin to reduce burgeoning world during the depth of the winter.
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