Written Commentary
CRUDE OIL
August Crude Oil was higher early Monday but off its overnight highs. The market rallied off reports of Iran and Israel trading strikes, but it back off its highs after Iranian state media reported that Iran’s armed forces had announced an end of military operations against Israel (unless Israel attacks again). Earlier, Israel had said it hit a petrochemical plant in Iran’s southwest as well as other strikes on military targets. Iran’s Islamic Revolutionary Guard Corps said it retaliated with a strike aimed at a similar Israeli facility in the city of Haifa. This followed Israeli strikes on Hezbollah strongholds in Beirut over the weekend. The market remains defined by the closure of the Strait of Hormuz and the prospects of a peace agreement that would precipitate a reopening.
PRODUCTS
Product prices were higher early Monday on reports of renewed strikes between Iran and Israel but backed off their highs on a report that Iran was standing down for the moment.
NATURAL GAS
July Natural Gas gapped lower on Monday as cooler temperatures were forecast for the US, thus extending a selloff that was put in motion on Friday. The 6-10 and 8-14 day maps show an area of below normal temperatures covering the eastern Rockies, the great plains and the Midwest from the Canadian border down into Texas. This marks a significant change from last week, when mostly above normal temps were expected, and this should limit cooling demand. LSEG said average gas output in the US lower 48 states are estimated around 108.8 billion cubic feet per day (bcfd) so far in June, down from 109.7 bcfd in May and the record 110.6 bcfd in December. Average output improved through the course of last week, and this may have contributed to Friday’s selloff.
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