What goes around comes around and the December crude contract came around in a big way yesterday, reversing Wednesday’s 1.6% drop with a $2.41 or 3.1% rise to close at 79.87. Prices received a boost after the morning’s GDP results and crossed Wednesday’s 78.45 pivot high before 9am. The bears politely stepped aside thereafter and projected 78.91 inflection was passed with little resistance - prices peaked a dime above our 80.36 intraday but total volume was down 2.4%.
As far as next week’s EIA report goes, the five-year average is 29 Bcf with an error of in between 40 Bcf and 18 Bcf. If we see an injection in the lower end of the error, that would still push storage up to 3.78 Tcf, i.e. to within 3% of capacity.
Bottom line, we are at record high surplus in all three market areas and we are at theoretical capacity in the West and within hailing distance of it in the GoM. Thus, from this point on the bulls are gambling on the weather.
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Stephen Schork is the Editor of, and has more than 17 years experience in physical commodity and derivatives trading, risk systems modeling and structured commodity finance.