Rallies fizzled in the energy complex last week after demand concerns were raised in crude oil and natural gas.
The weakness in crude oil is not a major concern because supply is getting tighter, however, with the start of injection season just right around the corner, natural gas bulls may have fired their last shot early last week.
U.S. West Texas Intermediate and international-benchmark crude oil futures managed to eke out a small gain last week, but the price action on Friday suggests there is room for further downside pressure.
The markets were able to overtake a key technical level on their way to a 4-month high, mostly on the back of the OPEC-led supply cuts and talk of extending the plan to cut production, trim the global supply and stabilize prices.
However, these gains were erased when concerns about demand were brought to the forefront on Friday.
Although buyers were able to produce a new multi-month high, WTI and Brent crude oil settled lower 3 out of five sessions. This suggests the selling may be getting stronger, or the buying weaker.
Fundamentally, creeping into the minds of traders were concerns over demand due to worries over the slowing U.S. and global economies. The Fed contributed to the worries over domestic demand when they slashed their growth forecast and hinted the economy wasn’t strong enough to withstand any more rate hikes this year.
Source: FX Empire