Written Commentary
CRUDE OIL
July Crude traded to a new contract high early Monday and the nearby contract to a two week high on reports of a drone attack of a UAE nuclear power plant. The drone hit an electrical generator outside the inner perimeter of the plant; UAE nuclear officials said the plant remained safe and no radioactive material released from the strike. Saudi Arabia said it intercepted three drones that entered from Iraqi airspace. Trump added a new warning to Iran on Truth Social, and Axios reported that he is expected to meet top national security advisers on Tuesday to discuss options for military action. All of which indicates we are no closer to an agreement with Iran to reopen the Strait of Hormuz, and raise the risk of escalation that could lift the market back up to the March highs around $120 unless some sort of solution is arrived at.
PRODUCTS
July RBOB traded to a new contract high this morning, and the nearby contract reached its highest level since March 23.
NATURAL GAS
July Natural Gas was sharply higher early Monday, in line with other energy markets in the wake of the drone strikes in UAE and Saudi Arabia. The July contract reached its highest level since April 7, and the nearby its highest since April 27. US gas prices have been insulated from the global market because the US has been exporting about as much LNG as it can. Other supportive factors are an apparent slowdown in US production and warmer temperatures in the US that could provide an early start to the cooling season. The 6-10 and 8-14 day forecasts show above normal temperatures across most of the lower 48.
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