Written Commentary
CRUDE OIL
July Crude Oil was lower early Tuesday relative to Friday’s trade but was up off its lows, while Brent was higher relative to Monday’s close but inside Monday’s range. The market was sharply lower over the weekend off optimism about a potential agreement between the US and Iran over reopening of the Strait of Hormuz, but it bounced off a report that the US military struck targets in southern Iran on Monday, including boats attempting to lay mines and missile launch sites. Representatives from both nations said they have made progress on a memorandum of understanding that would halt the war and give negotiators 60 days to reach a final deal. A newspaper citing a diplomatic source said the US and Iran said the plan would be to open the Strait of Hormuz about 30 days after the two countries reached a deal.
PRODUCTS
Product prices were both lower early Tuesday but off their lows, in line with the action in crude oil.
NATURAL GAS
July Natural Gas was higher early Tuesday after falling to its lowest level since May 7 early in the session. European natural-gas prices were higher after the US attacked targets in Iran and after QatarEnergy extended a force majeure clause on some LNG deliveries. The US market has been insulated from global LNG trade for the most part because US is already exporting about as much LNG as it can. However a peace deal that opens the Strait of Hormuz should eventually allow LNG shipments from Qatar to resume, which would increase competition with US product. On the other hand, it would take some time for the Qatari shipments to return to pre-war levels given the likely damage to processing terminals from Iranian strikes earlier this year.
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