Written Commentary
CRUDE OIL
Despite a higher high for the move and the highest trade since November 26th overnight the energy markets are tracking lower and are facing mixed demand signals. On one hand, the UK has reverted to activity restrictions, while developments from the virus front are very positive. Certainly, the markets are technically overbought given the rally of the past 6 trading sessions and there are reports overnight that Asian buyers of Middle East oil did not request additional supply beyond the levels anticipated.
With a sharp range up extension yesterday and Asian crack values near one-month highs, the gasoline market appears to have become the leadership market of the petroleum complex. While absolute implied demand readings are not impressive, it is likely that implied gasoline demand is set to finish the year with many demand readings posted above year ago and above average levels.
NATURAL GAS
While the natural gas contract clawed its way back up into the recent gap down, the bull camp was unable to hold all the gains forged early in the Wednesday trade and prices are tracking lower today. Seeing natural gas tracking lower in the face of a cold snap in China and below normal temperatures in the western United States, and isolated cold temperatures in Europe highlights the bear edge today. However, the trade will watch closely for signs of increased Chinese buying especially after an Asian company purchased 5 LNG cargoes for January through February delivery.
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