Written Commentary
CRUDE OIL
July Crude Oil is near unchanged this morning and is holding last week’s lows despite a lower open expected for the stock market on the Moody’s downgrade of the US credit rating. The Baker Hughes rig count showed US oil rigs in operation were down 1 rig to 473 last week. This was down from 497 rigs a year ago but above the five-year average of 452. US Treasury Secretary Bessent said that President Trump will impose tariffs at the rates he threatened last month on trading partners that do not negotiate in “good faith,” which presents a less optimistic picture towards future oil demand this morning than a week ago. China’s April factory output grew 6.1% from a year earlier in April down from +7.7% in March but ahead of the +5.5% expected from a Reuters poll. US and Iran seem a bit further apart this week in their negotiations over Iran’s nuclear program. US special envoy Steve Witkoff said on yesterday that any deal must include an agreement not to enrich uranium, and that drew swift criticism from Tehran and hints that an agreement is further off than it appeared last week, and so is the threat of more Iranian oil hitting the market. Russia detained a Greek-owned oil tanker on Sunday after it left an Estonian Baltic Sea port. The Estonian Foreign Ministers said this is due to the fact that they started to harass Russia’s “shadow” fleet of tankers hauling oil despite EU and US sanctions.
PRODUCT MARKETS
July RBOB is lower this morning, and the market’s failure to close a gap lower open from last Wednesday could offer a key resistance area this week. US gasoline supply is about the midpoint of the range of the past four years.
NATURAL GAS
July Natural Gas gapped lower overnight and fell to its lowest level since April 21, as US gas supply continues to rebuild and we settle into the low-demand season. Last week’s EIA report showed US storage 1.9% above the five year average. The Baker Hughes rig count showed US natural gas rigs in operation were down 1 rig to 100 last week. This was down from 103 rigs a year ago and below the five-year average of 114. Oil rigs were also down 1 to 473. A joint venture project developing the first marine fuel facility for liquefied natural gas in the US Gulf Coast has secured final permits, and construction is expected to begin later this year. US LNG can be used as a marine fuel in US ports and surrounding waters without export licenses, which presents an additional outtake for US gas production. A slightly milder forecast is developing for the US in the 8-14 day outlook, with moderately below normal temps in the eastern US and slightly above normal out west.
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