Written Commentary
CRUDE OIL
August Crude Oil is a little higher this morning but is still hanging out at the bottom of this week’s very wide range. The market put in what appears to be a major top on Monday with a key reversal in the wake of the US attacks on Iran nuclear facilities. Volatility and anxiety over Mideast supply all peaked at the open on Monday. This leaves the market in a position to focus on demand and normal supply issues and looking at a wide range for consolidation. A couple of demand factors have emerged to offer support. Chinese demand appears to have picked up, with Reuters reporting that they imported more than 1.8 million barrels per day (bpd) from Iran during the first three weeks of June, citing data from ship-tracker Vortexa. The US DOE said yesterday that scheduled deliveries of crude oil into the Strategic Petroleum Reserve will not be completed until the end of the year due to maintenance, as much as seven months behind schedule.
NATURAL GAS
August Natural Gas is higher this morning after bouncing off its April low yesterday in the wake of the EIA storage report. The report showed US gas storage for the week ending June 20 showed a net injection of 96 bcf last week versus an average expectations of +88 from a Reuters poll. This was the 12th time in the last 14 weeks that the net increase has been above the average expectation. Storage was down -6.6% from a year ago and 6.1% above the five-year average versus -8.0% and +5.6% the previous week. Hot weather in the lower 48 boosted cooling demand this week, but conditions look less extreme out ahead, with the NWS 6-10 and 8-14-day forecasts calling for a balance of normal temperatures in the Central Plains to the Midwest, Great Lakes and the and northern Atlantic Coast and above normal in the Rockies and the Southeast, from Texas to the southern Atlantic coast.
PRODUCTS
Of the crude oil complex, gasoline supplies are the least tight, but we are into the peak driving season. This week’s EIA numbers should have been supportive with stocks falling last week and implied demand the highest for that week in at least six years, but August RBOB is on the defensive this morning.
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