Written Commentary
NATURAL GAS
July Natural Gas backed off from 2 ½ week highs yesterday but is back near those levels this morning, as the forecast for a heat wave to hit much of the lower 48 is boosting demand expectations. The 6-10 and 8-14 day forecasts have temperatures above or much above normal in the eastern two-thirds of the nation and southwest, with only the northwestern part missing out. Cooling degree days are expected to climb above normal levels starting Wednesday and reach a peak around June 25. For the EIA Natural Gas supply report later this week, analysts are looking for a 76-86 bcf increase in US storage from last week. Last week’s report showed a gain of 98 bcf for the week ending May 31, up 15% from a year ago and 25% ahead of the five-year average. LSEG said over the weekend that output in the lower 48 states has slipped to an average of 98.0 bcf per day so far this month, down from 98.1 in May. They look for demand to fall to 93.3 bcf per day this week from 94 last week but climb to 99.2 as the hot weather takes hold.
CRUDE OIL
The crude oil complex is facing a monthly OPEC update and an EIA Short-Term Energy Update today and an IEA report tomorrow that could spark more volatile action. August Crude already saw a sharp rally yesterday and held most of those gains overnight. Traders will also be watching US economic data this week, as any indication that the Fed will be inclined to postpone rate cuts further would support the dollar and undermine oil prices, while any resurfacing of September rate-cut expectations could provide support. For the US energy inventory reports this week, average trade expectations call for a 1.8 million barrel-drop in for US crude oil stocks. Refinery runs are expected to drop to 95.1% of capacity versus 95.4% in last week’s report. Last week’s report had a surprise increase of 1.2 million barrel in crude stocks for the week ending May 31. They were down 3.3 million from a year prior but 18.2 million above the five-year average.
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