Written Commentary
CRUDE OIL
Despite fresh demand fears associated with Delta variant infection headlines, the energy markets are also facing an OPEC plus meeting this week. The OPEC plus meeting is scheduled to begin July 1st and the trade is widely expecting another incremental return of supply. Offsetting the potential increased supply flow from OPEC plus, is news this morning that Chinese crude oil inventories into June 24th fell to the lowest level since early February.
While gasoline prices are only showing modest weakness to start the Monday US trading session, headlines touting the serious surge in Delta variant coronavirus infections could become a serious threat against energy demand. In retrospect, the gasoline market saw a volatility explosion at the end of last week following a Supreme Court decision allowing small US refineries to continue to be exempted from mandated biofuel standards.
NATURAL GAS
Obviously, an explosion in natural gas prices (plus $0.33) is likely prompting a portion of the long-held net spec and fund short positioning to buy back their positions. Residual heat in the US Northwest and an extension of above normal temperatures for Europe, provides an overall favorable demand environment for natural gas.
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