Written Commentary
CRUDE OIL
While fading the uptrend action in crude oil over the past 2 1/2 months has been a losing proposition, it would appear as if prices have lost upside momentum, the trade is seeing a rising threat against US demand and the bulls have encountered a number of bearish developments overnight. Certainly, the threat of returning to closure in a growing portion of the US from the infection spread is back in the windshield but seeing a crude oil inventory increase of 2 million barrels from the API, an uptick in weekly European crude storage levels and a reduction in the magnitude of the contraction in US oil production forecast for the EIA adds to the bearish condition.
NATURAL GAS
We suspect that the net spec and fund short in the natural gas market has been reversed with the recent rally and that could leave the market vulnerable to corrective action especially given a slight narrowing of the area of much above normal temperatures in the latest US outlook. However the gas market might derive some support from EIA forecasts that US dry natural gas production for 2020 would be only 89.24 BCFD in July compared to a previous forecast of 89.65 BCFD.
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