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Oil and Gas Follow Main World Markets Lower

September 8, 2020

Risk Off was the word on the Tuesday following Labor Day. An increase in Covid cases in Europe sparked selling of equities, which softened Oil. In the last 4 sessions, the S&P has lost -7%. This global macro weakness has exacerbated demand loss concerns, contributing to a -14% selloff in oil over the same period. Saudi Arabia lowered its OSP by -$1.40/bbl, which did not help the market. While Libya is not back on the market yet, their looming supply is also casting a shadow on prices. And Iraq's less than ideal support for production cuts on a go forward basis is also pressuring the market. The one thing that R^2 believes is not driving the market lower is speculators. While it is always possible that funds can become more aggressive on short positions, the Net Speculative length is (on an adjusted basis) very lean.    

 

Natural Gas fell 19 cents. The incremental driver is a slow return of power to the Lake Charles area after Hurricane Laura. Lack of Electricity is slowing efforts to restart Cameron LNG exports.   



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