Written Commentary
CRUDE OIL
While the August crude oil contract did not hold a 4 day high yesterday into the close, this morning it is clear that prices can continue to rise without a definitively positive global view operating in the marketplace. However, the trade should be supported as a result of the latest EIA US oil production figures (for April) which showed a decline of 669,000 barrels per day from the month of March but also because of a much larger than expected API crude stock decline last night of 8.2 million barrels.
NATURAL GAS
We remain highly skeptical of the natural gas market’s capacity to extend this week’s early recovery bounce and the failure to sustain gains following news yesterday that US natural gas production declined by 2.5% in April (we think that decline took place before the largest declines in production were expected in May and June) is a sign that the recent rally was simple short covering with only a small measure of long term buying.
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