Written Commentary
CRUDE OIL
June Crude Oil was higher early Monday on a report from Iran’s Fars news agency that a US warship intending to pass through the Strait of Hormuz was turned back and that two missiles had hit the ship. This follows an announcement from President Trump over the weekend that the US would begin efforts to assist ships stranded in the strait, which was followed by a warning from Iran to not attempt to do so. There is the usual confusion between contradicting claims by the US and Iran regarding the incident, with Axios citing a senior US official denying that a US ship was hit. US Central Command said it would support the effort with 15,000 military personnel, more than 100 land- and sea-based aircraft, along with warships and drones, but then a report from Axios later claimed the US Navy would not necessarily escort ships through the strait. OPEC+ countries agreed over the weekend to raise oil output targets by 188,000 barrels per day in June, the third consecutive monthly increase. This does nothing to ease near term supply tightness but shows the group ready boost output once the strait opens.
PRODUCTS
June RBOB reached a new contract high early Monday on reports of a US warship being hit near the Strait of Hormuz following President Trump’s announcement over the weekend that the US would begin assisting ships stranded in the strait.
NATURAL GAS
The 6-10 and 8-14 day maps show the cooler than normal pattern retreating to the northeastern US, while much above normal temperatures expand eastward from the west coast into the central/western Midwest, which perhaps opens the possibility of increased cooling demand. On the whole, the weather pattern appears normal. However, the somewhat cooler pattern recently coupled with a drop in US output last month has some traders looking for the net injection to be lower than normal in this week’s EIA report.
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