Overnight crude and refined products are down modestly as the US dollar resurgence off recent lows continues to keep rallying energy prices in check. With the Saudis reporting the best month of exports in the past decade, highlighting healthy global demand, one would possibly expect to see a more bullish reaction. However, the fact that the Saudis are producing enough crude to be able to match decade old export numbers most likely tones down the demand exuberance.
Nonetheless, the price of crude remains elevated respective to the recent lows as low volatility can indicate potential for another large move in the near future. The obvious question being do we continue the grind higher or is there some rationale for a retest of lower levels. The fundamental have been relatively constant with most sovereign oil nations talking their position, giving little useful information with which to attempt to divine market direction from.
A look at the technicals of the July WTI crude oil does start to paint a picture that could indicate a retrace of the recent rally. The daily price action today has opened below recent trend line support putting the previous bullish trend line violation target of 54.40 in the crosshairs. While this would be a significant correction of nearly 6 dollars to the downside, it would be the first legitimate test of that important trend line violation and a generally necessary development for an extended rally to resume.
The natural gas continues its climb higher as the market seems to be more comfortable with a more traditional seasonal valuation in the low 3 dollar range rather than the mid 2`s. There has been some warmer weather in recent days though it doesn’t appear to be anything that would alter consumption enough to have any real effect on the price discovery.
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