Written Commentary
NATURAL GAS
July Natural Gas saw a big outside reversal yesterday as the market had apparently overreacted to the interruption of gas supplies to Britain from Norway. The market was slightly higher overnight but inside yesterday’s range. GASSCO reported this morning that Norway’s gas exports to Britain are expected to gradually resume on Friday, which confirms reports earlier this week that repairs were expected to be completed by then. Energy Secretary Granholm told Reuters yesterday that the Biden administration intends to finalize an environmental and economic review of its LNG exports by the end of the first quarter of 2025. She said she did not anticipate the pause in export permitting to affect US competitiveness in the global market because exporters are currently shipping only a fraction of what has already been authorized. A Reuters poll projects EIA natural gas in storage to see an injection within a range of 89 to 91 BCF. Last week’s report showed an increase of 78 BCF from the previous week to 2,795. This was up from 2,415 a year ago.
CRUDE OIL
July crude oil has taken a pause in its recent selloff, as traders await the weekly EIA inventory numbers later this morning. The trade is looking for a decline of 1.9 million barrels from last week. Last week’s report showed they were down 4.156 million barrels for the week and down 4.968 million from a year ago. Market sources told Reuters that yesterday afternoon’s API report showed a decline of 4.052 million barrels for the week. Refinery runs are expected to be up 0.4% from last week. The market saw a steep selloff on Monday on news the OPEC+ left room for producers to gradually unwind “voluntary” cuts in the fourth quarter. Members agreed to extend 3.66 million bpd of its output cuts that were set to expire at the end of 2024 to the end of 2025. Yesterday’s JOLTs report showed that US job openings fell more than expected in April, which could improve the chance for a Fed rate cut at some point.
Three British energy companies have decided to delay the planned start of oil production at their joint venture platform in the North Sea by one year due to political uncertainty now that an early UK election has been called. The had been expected to start production in the fourth quarter of 2026. US Energy Secretary Granholm told Reuters yesterday that the US could increase the rate of replenishing the SPR once maintenance is completed at four sites. The Energy Department has been buying about 3 million barrels per month since it released 180 million barrel is in 2022 after the Russian invasion of Ukraine. A group of Democratic US House members have asked the DOJ to investigate allegations of antitrust behavior among US oil producers and OPEC, saying the two largest US oil companies have been conspiring to keep prices high.
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