Natural Gas Market “Neutral”, Crude Oil Market “Bullish”

The natural gas market view has moved back to “neutral.” With the short term weather forecast a less bearish than it has been, the market mounted a decent short covering rally on Tuesday, pushing prices just above the $3.61/MMBtu resistance level. The market has been oversold and the current rally can only be categorized as a short covering rally and not a major shift in the underlying trend. Depending on the EIA/NOAA winter outlook to be released later today, the market could be pushed off of its “neutral” perch.

With WTI crude oil now trading above the $85/bbl level, the market is keeping its bias on the “bullish” side, with a caution flag that the direction over the last few days can change quickly if any of the looming macroeconomic data due out this week are negative or if any of the 30 second news snippets surrounding Europe are “bearish.”

Later today the EIA will release their Winter Outlook in conjunction with their “Short Term Energy Outlook.” Based on both the IEA and OPEC reports, we can expect the EIA to lower their projection for global oil demand growth.

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About JWM Energy Consultant
Professional Energy Consultant. I advise large energy-users on procurement strategies to reduce electricity and natural gas costs.

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