Now while some people think that this increase in production is the reason why oil is down, it is not the truth of the matter. The unity within the OPEC+ cartel is very bullish for prices and the amount of barrels that they’re adding to the global market is very small and just enough to get by.
Still, it won’t matter if we do see economies shut down because of this corona virus delta variant. Scattered reports of an increase in hospitalization in some states and reports of the virus spreading are getting traders nervous to start the week. Oil prices are below the lower Bollinger band and we haven’t seen that for some time. We are almost below that technical indicator that we’ve been looking at since last November. That means we’re either extremely oversold or the market is getting ready for a major breakdown. At this point, we don’t expect a major breakdown of the price of oil unless you think the global economy is getting ready to collapse. The only way that we think it’s going to collapse is if the delta variant starts to shut down worldwide economies again.
Natural gas is showing some strength as the summer heat hits big parts of the country and support is coming from strong international LNG demand.
Grain prices are also getting concerned about another blast of hot weather as drought conditions in some parts of the country and too much rain in other parts of the country is stressing US crops. The carryover for many grains is the tightest it’s been in over 10 years and there is concern that if we don’t have a bumper crop, prices could spiral out of control