WTI Crude Oil
The WTI Crude Oil market initially rallied during the course of the session on Thursday but struggled above the $47 handle. Appears that the market is simply looking for a little bit of momentum building to continue going higher. There is a lot of noise between here and the $50 level so it’s difficult to imagine that is going to be a fairly easy move. I think that every time we pullback on short-term charts you have to look at it as a potential value play, but recognize that you will probably have to play several trades to the upside in order to actually profit. Otherwise, the volatility may be a bit much for many of you to handle. Ultimately though, it’s difficult to sell this market as long as the US dollar continues to fall.
Natural Gas
Natural gas markets fell slightly during the course of the day on Thursday as we continue to meander just below the $2.20 handle. Natural gas is an interesting market at the moment as it appears that the bullish pressure continues to build to the upside, but the longer-term fundamental outlook for natural gas is absolutely horrific. Currently, there are at least 14,000,000,000,000 ft.³ of reserves in the ground in the United States alone waiting to be drilled. This of course is going to keep natural gas in a bearish market over the longer term, but presently a lot of natural gas drillers have stepped away from the fields as the market is still awash in excess natural gas. On top of that, the northeastern United States is without a doubt the largest consumer of natural gas in the world, and as we step into the warmer months there will be a lot less demand.
It will take a while for the market to rebalance itself but it is only a matter time before higher prices drives drillers back into the fields and franking continues to offer more than enough natural gas going forward. The last report I read suggested that the United States had over 300 years’ worth of natural gas just waiting to be taken. On top of that, candidate isn’t far behind.
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