Written Commentary
CRUDE OIL
August Crude Oil is lower this morning after reaching its highest level since April 2 overnight. Tensions in the Middle East have been on the rise this week, with Iran and US exchanging threats ahead of a their sixth round of nuclear talks planned for this weekend. Report yesterday that the US is preparing a partial evacuation of its Iraqi embassy and will allow military dependents to leave locations around the Middle East due to heightened security risks in the region only added to the anxiety, with some traders even expressing concerns about whether shipments through the Straits of Hormuz could be affected. Yesterday’s EIA report was bullish for crude oil, with stocks falling 3.6 million barrels last week versus expectations for -200,000. Refinery runs increased another 0.9%, which allowed for a stronger than expected decline in crude stocks and somewhat larger than expected gasoline and distillate stocks. US implied gasoline demand recovered from the previous week and was back above year ago levels.
NATURAL GAS
Hot weather is expected for the next two weeks over most of the lower-48 states, which may allow for a normal or even above normal natural gas usage for a change. For today’s weekly the EIA storage report, the Reuters poll of analysts has an average of expectations for a net injection of 108 bcf last week (range +96 to +112) versus a five-year average of +88 bcf. As of last week’s report, storage was -10.4% from a year ago but +4.1% from the five-year average. There were 68 total degree days last week, compared with the 30-year normal of 63 for the period, data from financial firm LSEG showed.
PRODUCTS
Like crude oil, product prices have backed off from overnight highs that were built on Middle East anxiety.
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