July Rally Continues into August
Starting off this week it appeared that we may have seen the top of the recent rally in the Commodity sector. That changed Tuesday morning as the EIA released a guidance report that they expect US crude production to increase an additional 200,000 barrels per day based on….. yep, higher prices. This fueled the indexes in a self-fulling prophecy sort of way and turned around what was a $.05 down day to a $.07 up day. The buying carried over to Wednesday as the inventory report showed a solid increase in crude stocks with the products showing losses. Key note on the crude gains is that it looks to be largely due to slashing exports. Something we have been saying might be a prudent step for a while now. Distillates are now $.80 higher than July 1st, erasing the steady 8 month decline that we have enjoyed. Sentiment is fixated on Saudi led OPEC cuts and appears to shrug off any fundamental data. It’s almost like mob mentality really. Crude builds, soft demand, economic uncertainty, should all push prices lower.
As someone once told me “high prices are the cure for high prices” and it is hard to see this rally continue. Backwardation remains with both gas and diesel, you could see end of month outages. A supplier dedicated to the Commercial End User is definitely someone to have in your foxhole during these times. Again, I always enjoy speaking specifically about your needs, please do not hesitate to schedule a quick talk below.
