Written Commentary
CRUDE OIL
August Crude Oil was lower early Wednesday but managed to recover to higher on the day as the session progressed as selling eased with the trade tried to determine how soon supply relief will be felt from the reopening of the Strait of Hormuz. The Trump administration has received some criticism about the Memorandum of Understanding as details of the agreement have emerged, but this has also prompted Trump to respond that the US could resume bombing if he doesn’t like how the negotiations are going. The memorandum specifically states that the two sides will use the 60-day cease fire to finalize work out the details of the agreement. IEA says the global oil market will move into a significant supply surplus in 2027 after recovering from the closure of the Strait of Hormuz. They expect global supply set to increase by 8 million bpd and demand by 2 million.
PRODUCTS
Product prices were steady to higher early Wednesday as selling took a pause with the market tries to determine the implications of the Memorandum of Understanding between the US and Iran.
NATURAL GAS
August Natural Gas has been in a sideways pattern recently, as a lack of extreme heat in the US has kept cooling demand low but US production has lagged as well. The weather forecast is mixed, with above normal temperatures predominant in the western and southern US below normal temps in the northeastern quadrant, from the northern and central plains to the east coast, which will have a mixed effect on domestic cooling demand. Spot prices at the Waha hub West Texas have turned positive for the first time since early February, as regional demand for the fuel rises with the arrival of the summer air conditioning season and with the startup of flows on Kinder Morgan’s Gulf Coast Express expansion pipe in Texas, which helps ease a bottleneck.
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