Quiet markets after the weekend as the world waits on the important FOMC meeting scheduled for Tuesday and Wednesday of this week with the likely result being no action, though there could be some important changes in language possibly clearing the way for a September rate hike.
The global landscape of fuel purchasing and sales is constantly changing and today we saw some confirmation of what will be a rather significant alteration in gasoline supply globally. We have touched recently on the Saudis and other crude oil producing Middle Eastern nations looking to up their refining capacity to start exporting auto fuels in large numbers. T
his will affect not only the global supply for RBOB but will also have an effect on the crude supply. As the Saudis keep more crude within their borders in order to produce refined material, the balance with shift, possibly opening up some of the crude market to non-traditional exporters, like the United States (though that would require changes in American crude export laws).
This shifting landscape could have an impact on the price discovery of relative products particularly the relationship between WTI and Brent crude. If the US were to move to fill some of the void left by Middle Eastern exports shrinking, then we could see the price differential narrow from the somewhat standard 5 to 10 dollar range, possibly coming closer to parity.
Natural gas has seemingly shrugged off the weakness of Friday’s trading again above 2.80 in what should develop into a several-week grinding rally. At some point, we should see the critical move above 3 dollars converting that level from resistance to support. For the moment though, volatility appears to be on the decline as the price discovery has been relatively orderly.
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