Written Commentary
CRUDE OIL
We continue to think the crude oil market remains vulnerable to macroeconomic corrective action, and perhaps to less supportive supply-side developments. On the other hand, the EIA has predicted that US shale oil output will fall to a 2 year low of only 7.5 million barrels per day in August as that refutes recent private forecasts that US production declines have leveled out.
NATURAL GAS
With China indicating they will be unlikely to meet phase 1 demand for US gas imports, the charts remaining negative and European weather turning cooler, the bear camp has probably regained the edge. However, the market should see some cushion from what continues to be a generally above normal temperature pattern in roughly one-third of the US out to July 27th. However, the bear camp continues to embrace evidence of higher US production and that reverses views in late June and early July that lower-48 state US gas production would continue to decline.
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