It appears that the frame work is in place for a third Greek bailout. There will be many continued hurdles to overcome as the bailout is structured that could produce some market angst as we approach those future deadlines though, for now, the market across the board is breathing a general sigh of relief with equities and bond yields both trading higher. The details of the bailout are such that there could be some grass root resistance to the deal from the people of Greece as it features more austerity, creditor approval for major legislative changes and a transfer of some public works into private hands. The Greek people had stood against these measures during the past election that saw the Greek PM Tsipras take power based on his promise of less austerity and restructuring that did not cede power and public interests to third parties. Nonetheless, the market seems to like the agreement, freeing it from the now more than two weeks old shackles that had bound the price discovery.
For energies it is a positive but in the face of mostly bearish news. As we move out from under the specter of the Greek crisis and look at more directly related energy fundamentals, it would seem that this recent decline in pricing is justified. However, with WTI trading in the mid 52 handle after trading as low as 51.26 in the over night session, it may be a bit overdone. The looming Iran deal has markets shrinking back off of rallies as potential for nearly 200,000 barrels per day of additional crude could hit the global market if a deal is struck between Iran and the six nations currently sanctioning her trading activity. While this is not a massive injection of supply, it does come to a market that has a glut of product along with some demand questions as of late. The positive could come though from the refined sector as we are seeing more fuel stay home around the globe as refining operations are increasing in Saudi Arabia and other OPEC nations. Similarly, the US demand for gasoline and other refined products is at a ten year high, just possibly driving the bullish end of the price discovery and, to some extent, neutralizing the bearish supply effect.
Natural gas continues its steady very modest climb printing in the 2.80's today. Fundamentally, there is little to go on here as supplies are strong though not in the record territory they once were when the price was driven down below the mid 2 dollar point. The pricing appears to be being driven more on technical’s and momentum (or lack thereof). We continue to look for those technical’s to drive the price discovery toward three dollars and then higher as momentum should build eventually filling the now three month old gap up to 3.26.
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