Written Commentary
NATURAL GAS
September Natural Gas was higher early Thursday as the market attempted to climb out of the hole from last week’s selloff. For the EIA natural gas storage report today , the Reuters poll has an average expectation for a net injection of 43 billion cubic feet for the week ending July 10 (range +30 to +62). The five-year average change for the week is +45 bcf (range +26 to +54). A heat wave this week helps support demand, but conditions are expected to moderate next week, with the 6-10 and 8-14 day forecasts showing below normal temperatures from the Midwest to the east coast and normal temps in the Northern Plains. The rest of the lower 48 still look above normal, not that this has led to any boost in gas prices to date.
CRUDE OIL
September Crude Oil was higher early Thursday and was approaching Tuesday’s four-week high. Hostilities continue to heat up between the US and Iran, and the possibility of re-re-opening the Strait of Hormuz is shrinking, with Iran threatening to strike infrastructure across the Gulf region after the US launched a fifth night of attacks and reimposed its blockade of Iran’s ports. Reuters reported that nine vessels crossed the Strait of Hormuz on Wednesday, mostly on the Iranian route, down from 13 the previous day.
PRODUCTS
September product prices were both higher overnight with RBOB reaching its highest level since May 20 and ULSD approaching Wednesday’s contract high. In addition to the tight supplies resulting from the closure of the Strait of Hormuz, Ukraine’s attacked on Russian oil infrastructure is cut off Russian supply to the global market and is apparently turning them into net importers. Two sources told Reuters on Wednesday that top Russian energy companies had approached Indian refiners for more gasoline.
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