Written Commentary
CRUDE OIL
August Crude Oil edged lower early Wednesday but had yet to move into the gap from the opening on March 2 (66.96-65.70) that was made at the start of the Iran war. Reuters reports that indirect technical talks between the US and Iran are under way in Doha with Qatar and Pakistan serving as mediators, but no direct talks between US and Iranian representatives. The latest contention is over Iran’s desire to control the Strait of Hormuz and to force ships to pay fees for passage. Under the memorandum of understanding for the cease fire, Iran agreed to let ships pass through the Strait for 60 days without charge, but Iran maintains that the wording allowed them to eventually levy fees. Another detail that needs to be worked out and that threatens to reignite hostilities. The trade seems to believe that flows will eventually be restored, but with August Crude Oil having already having fallen from a peak of $100.10 on May 18 to $68.22 overnight, the market would seem to be at a greater risk of higher prices ahead.
NATURAL GAS
August Natural Gas continues to chop around inside a two month range, finding support from seasonably hot weather that is expected to drive cooling demand but limited by amply US supplies. New York city is expected t see highs in the 100s on Thursday and Friday, and the Midwest is already seeing its hottest temperatures of the season. The 6-10 and 8-14 day forecasts show above normal trends across most of the lower 48 states. LSEG said average gas output in the US Lower 48 states rose to 110.0 billion cubic feet per day (bcfd) in June, up from 109.7 bcfd in May. The record was 110.6 bcfd in December.
PRODUCTS
Product prices were higher overnight despite crude oil prices edging lower. Russian President Putin said Sunday that the Kremlin was considering a ban on diesel exports after acknowledging mounting domestic shortages, which could continue to support US exports. API data was mixed, with US gasoline stocks -2.1 million barrels for the week ending June 26 versus an average expectation from a poll of analysts -1.0 million, while distillates were +2.9 million barrels versus -500,000 expected.
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