Written Commentary
CRUDE OIL
May Crude Oil was higher early Monday after President Trump over the weekend told the Financial Times that he wanted to take the oil in Iran can could seize the export hub at Kharg Island. This undercut suggestions that Iran and US officials would take part in the discussions that Pakistan said it was getting ready to host in the coming days. Then again, Trump referred to a possible cease fire/peace deal this morning while extending his threats in the same text. It does appear some sort of indirect talks are going on. The Israeli military said Iran launched multiple waves of missiles at Israel over the weekend and that an attack had also been launched from Yemen. Kuwait said had intercepted five drones in areas under its protection. The Baker Hughes rig count showed US oil rigs in operation were down 5 rigs to 409 last week. This was down from 486 rigs a year ago and below the five-year average of 489.
PRODUCTS
May RBOB and May ULSD are both close to take out their contract highs from May 9 this morning. Friday’s Commitments of Traders Report showed managed money traders were net sellers of 7,556 contracts of RBOB for the week ending March 24, reducing their net long to 72,314. The net long is in the upper end of the historic range, which leaves the market vulnerable to heavy selling if support levels are taken out. For ULSD, managed money traders were net sellers of 4,781 contracts, reducing their net long to 18,625. This is not an overbought condition for these traders; it is closer to a flat position than to the record net long of 98,000 from 2018.
NATURAL GAS
May Natural Gas was lower early Monday after opening above Friday’s highs, as support from the larger than expected supply draw in last week’s EIA storage report melted away. The Baker Hughes rig count on Friday showed US natural gas rigs in operation were down 4 to 127 last week, and this decline may have lent some mild support initially today. This was up from 102 rigs a year ago and above the five-year average of 121. Ideas that US LNG export facilities will postpone maintenance this spring to meet export demand in the face of the tighter global supplies may have also lent support last week. Last week, EIA forecast US gas output to rise from the record 107.7 billion cubic feet per day (bcfd) in 2025 to 109.5 bcfd in 2026. The weather forecast show mostly mild temps that could limit late-season heating demand. The 6-10 day forecast showed some below normal temps in the northern Plains and in Texas, normal temps across the rest of the Great Plains and western Mideast, and above normal elsewhere. The 8-14-day as above normal across most of the nation.
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