Market Outlook Today

The natural gas market is maintaining its neutral view and bias, but could get more bullish if the near term futures contract closes above the $3.51/MMBtu level. The gas storage surplus that is building is going to get harder to work off until we see cold weather over a major portion of the U.S. In the medium term, many are skeptical about the ability of natural gas prices to muster any kind of strong upside rally absent some very cold weather for an extended period of time.

WTI crude oil is still trading above the key technical support level of the mid- $94’s/bbl and along with the changing fundamentals and geopolitics, the market is keeping its view and bias at cautiously bullish. The economic outcome in Europe this week will certainly influence the outlook for economic growth and the need for oil in the near term. WTI and Brent are once again back to being in sync with the direction of the U.S. dollar and euro, but are also being driven by the ongoing geopolitical situations in the Middle East.

Earlier most risk asset prices were higher, as shown on the chart below.

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Market Outlook Today

The natural gas market is maintaining its neutral view and bias, but could get more bullish if the near term futures contract closes above the $3.51/MMBtu level. The gas storage surplus that is building is going to get harder to work off until we see cold over a major portion of the U.S. In the medium term, many are skeptical about the ability of natural gas prices to muster any kind of strong upside rally absent some very cold weather for an extended period of time.

WTI crude oil is still trading above the key technical support level of the mid- $94’s/bbl and along with the changing fundamentals and geopolitics, the market is keeping its view and bias at cautiously bullish. The economic outcome in Europe this week will certainly influence the outlook for economic growth and the need for oil in the near term. WTI and Brent are once again back to being in sync with the direction of the U.S. dollar and euro, but are also being driven by the ongoing geopolitical situations in the Middle East.

Earlier as a new day of trading gets underway in the U.S., markets are mixed.

Description: Description: http://www.advancedenergycommerce.com/PubImages/16/chart5.gif

 

Crude Oil Commentary

Oil futures prices edged lower Tuesday, but remained north of $100 a barrel, as traders awaited further word on Europe’s debt crisis ahead of a key summit later this week. Light, sweet crude for January delivery on the NYMEX settled up $.29 at $101.28/bbl. Brent crude on ICE Futures Europe traded up 32 cents, or 0.3%, to $110.13 a barrel.

Trading remained cautious following an announcement from Standard & Poor’s late Monday that the ratings agency had placed 15 euro-zone nations on review for credit downgrades due to the deepening political and economic crisis. Reports of the announcement surfaced shortly before Monday’s close and squelched a rally that had earlier sent NYMEX futures surging above $102 a barrel.

Headlines out of the euro zone have been dominating trading in the oil market for the last several months, amid worries that the currency zone’s sovereign-debt crisis could trigger a broader economic slowdown that would curb demand for crude oil.
NYMEX crude futures have climbed from lows at less than $80 a barrel since early October, while Brent has surfaced from below $100 a barrel, largely on optimism that Europe will find a way to save the single currency zone from collapse.

Natural Gas Market

Natural gas futures prices are falling once again. The market is moving its view and bias back down to neutral, with one eye toward cautiously bearish even as the winter heating season is just getting underway. The month of November experienced below normal Heating Degree Days across the U.S. and December is not starting out much better when looking at the entire U.S. There are pockets of colder-than-normal temperatures in the southwest, but in the high population centers of the northeast, the temperatures are still relatively mild for this time of the year. It is going to have to get a lot colder over a much broader portion of the U.S. for demand to start to have an impact on the current oversupply situation, including the all-time record high amount of natural gas already sitting in inventory.

There is no doubt that heating demand is starting to occur in various parts of the U.S. For example as reported by the EIA in their weekly report last Thursday, many areas of the Southeastern United States experienced rare November snowfall and unseasonably cold weather earlier this week. Snow fell in parts of Missouri, Arkansas, Kentucky, Tennessee, and Alabama. The cold weather led to increases in natural gas consumption in the Southeast, particularly in the electric power and residential/commercial sectors, according to the EIA. In the region, many homes are heated by natural-gas-generated electricity. In November, natural gas used for electric power generation remained well above year-ago levels in the Southeast, as colder temperatures throughout the month pushed up demand.

The EIA also reported that dry gas production increased over the report week by 1.2 percent and was 9.4 percent above year-ago volumes for the same week. Daily production for the week was consistently near 65 Bcf. The 1.2 percent increase over the previous week was partly offset by declines in Canadian and LNG imports of 0.7 and 8.9 percent, respectively. Canadian and LNG imports are 17.6 and 51.9 percent respectively below year-ago volumes for the same week. Canadian imports averaged 4.4 Bcf per day over the week and LNG imports averaged 0.3 Bcf per day.

Simply put, supply continues to easily meet any level of demand that is occurring with a record level of natural gas still in inventory waiting to be called on to fill any gap from an above normal level of demand that may occur if the weather gets very cold for a sustained period of time. The net result has been a steady decline in natural gas prices with the current value down 3.6% on Monday and just about $0.17/MMBtu above the year-to-date low made back in October. It just does not feel like the market is overly concerned that we are now in the heart of the winter heating season.

Outlook Today

The natural gas market view and bias is cautiously bullish, but watchful of how price activity plays out over the next several trading sessions from Thursday’s bullish gas storage report and last Friday’s monthly jobs report. The market appears to be slowly moving into a mild uptrend and will remain in that pattern as long as the weather moves toward more normal conditions.

WTI crude oil is still trading above the key technical support level of the mid- $94’s/bbl and along with the changing fundamentals and geopolitics, the market is moving its view and bias back to cautiously bullish. The cloud of uncertainty got slightly smaller in Europe, but support is now coming from the ongoing geopolitical risk in the Middle East.

Earlier risk asset prices were mixed, as shown on the chart below.

Description: Description: http://www.advancedenergycommerce.com/PubImages/16/chart8.gif

Outlook Today

The natural gas market view and bias is cautiously bullish, but watchful of how price activity plays out over the next several trading sessions from Thursday’s bullish gas storage report and today’s monthly jobs report. The market appears to be slowly moving into a mild uptrend and will remain in that pattern as long as the weather moves toward more normal conditions.

WTI crude oil is still trading above the key technical support level of the mid- $94’s/bbl and along with the changing fundamentals and geopolitics, the market is moving its view and bias back to cautiously bullish. The cloud of uncertainty got slightly smaller in Europe, but support is now coming from the ongoing geopolitical risk in the Middle East.

Earlier risk asset prices were mixed, as shown in the chart below.

Description: Description: http://www.advancedenergycommerce.com/PubImages/16/chart2.gif

Outlook Today

The natural gas market view and bias is cautiously bullish, but watchful of how price activity plays out over the next several trading sessions from today’s expected bearish gas storage report and Friday’s monthly jobs report.  The market appears to be slowly moving into a mild uptrend and will remain in that pattern as long as the weather moves toward more normal conditions.

WTI crude oil is still trading above the key technical support level of the mid- $94’s/bbl and along with the changing fundamentals and geopolitics, the market is moving its view and bias back to cautiously bullish.  The cloud of uncertainty got slightly smaller in Europe, but support is now coming from the ongoing geopolitical risk in the Middle East.

Earlier risk asset prices were mixed, as shown on the chart below.

Description: Description: http://www.advancedenergycommerce.com/PubImages/16/chart5.gif