Written Commentary
CRUDE OIL
September Crude Oil is slightly lower this morning but is holding inside yesterday’s range, for the most part. The market could be garnering some support from the announcement of a trade deal with Japan but not enough to overcome a bearish-leaning API report from late yesterday. Sources told Reuters that API crude oil stocks were -577,000 barrels for the week ended July 18 versus an average trade expectation of -1.6 million. Gasoline stocks were -1.23 million barrels versus -900,000 expected, and distillates were +3.48 million versus -1.1 million expected. The EIA numbers will be released this morning, and in addition to the stocks expectations, refinery runs are expected to be -0.5% to 93.4%. The US. Energy Secretary said yesterday that sanctioning Russian oil to end the Ukraine War was a “very real possibility.”
NATURAL GAS
September Natural Gas extended its selloff overnight and took out the July 9, 18-month low at 3.193. The market is under the negative influence of a bearish technical indicator from Friday. The US weather forecast is not as hot as it was yesterday, with the 8-14-day showing a cooling trend over the Midwest, Great Lakes and eastward to the Atlantic coast. For the US EIA storage report this week, the early Reuters poll has an range of expectations for natural gas supply to show a net injection of 29 to 42 bcf for the week ending July 18.
PRODUCTS
API numbers were mildly supportive to gasoline but very bearish for diesel, with distillate stocks showing a surprising jump last week. The EIA report could command traders attention today given the lack of a major issue driving the market. Distillate stocks are near six year lows but are beginning their seasonal recovery. Gasoline stocks are close to average, and implied demand has been disappointing.
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