Ukraine Strikes Back!
Brent crude (NYMEX:SCM14) is on the rise dragging up WTI as Ukraine strikes back. Ukraine's military launched what was called a large scale offensive to retake buildings in the Eastern part of Ukraine. A Russia claim they have shot down 2 helicopters and say that at least one person has been killed. They also said that the Geneva accord is now dead. The Risk premium is coming back just after record U.S. supply tried to break the market. This day was supposed to be about the jobs report that oil traders were going to use to gage demand expectations. Instead it's about what Vladimir Putin may do in response to Ukraine's action in Ukraine's sovereign territory.
Let it go! The economy was frozen and they blamed it on the weather. As for the bad economic data they said let it go, let it go, can't hold it back any more! The market is expecting a blowout and if they don't get it we will see disappointment! The Oil market will judge demand expectations that have recently been rising but if we don't see 200,000 plus jobs we will see a break in oil and products, assuming that Vladimir Putin can let it go. Don't count on that.
Natural gas (NYMEX:HPM14) won the battle but is still losing the war to refill storage. U.S. natural gas inventories rose last week, according to the U.S. Energy Information Agency. Inventories rose 9.1 percent, or 82 billion cubic feet, to 0.981 trillion in the week ended May 1. A Bloomberg survey expected inventories to rise 76 billion cubic feet to 0.975 trillion cubic feet. Yet we are still 50% below the five year average and well below the pace that will be needed to get supply back to where need to be next winter.