Aggression by Russia in the Ukraine is taking a back seat to economic weakness in Europe.
Deflation fears are being raised again after the European Union's producer price index fell 0.1% from June, and were down 1.1% from July 2014. That confirms data Europe the annual inflation rate fell to 0.3% in August from 0.4% in July which is far below Europe's target rate and raising the possibility the Euro zone deflation and Russian aggression and sanctions could really destroy crude oil (NYMEX:CLV14) demand.
In the Meantime U.S. production booms. The Wall Street Journal reports that in Texas "One of the state's oldest oil fields, the Permian Basin in West Texas, is booming again, thanks to advanced technologies such as hydraulic fracturing and horizontal drilling. And Permian oil output shows no signs of stopping at its current 1.7 million barrels a day." Still the WTI has better demand prospects as the U.S. economy is better than deflationary Europe.
While Gasoline Prices (NYMEX:RBV14) hit the lowest level since 2010 a fire at the BP refinery in Whiting Indiana raised Midwest prices to rise. Of Course we are entering shoulder season.
The heat has kept natural gas (NYMEX:NGV14) strong as it will lower the estimates for winter storage. Tropical storm Dolly has formed in the Gulf of Mexico but it is close to land and moving Northward over the Bay of Campeche and headed towards Mexico will not be much of a threat to Gulf of Mexico production.
Palladium is getting a boost from violence in Russia and is one of the strongest markets in commodities. Overnight we hit the highest trade price since 2001 before pulling back on weak Euro-zone data a 13 year high. Palladium has climbed 27 percent this year as usage rose in catalytic converters, which curb harmful emissions in cars, and as a five-month mine strike that ended in June in South Africa, the second-biggest producer, reduced supplies. The metal capped a seventh month of gains in August that was the longest such run since January 2011