Written Commentary
NATURAL GAS
June Natural Gas is slightly lower this morning after pulling back from three week highs yesterday. The recovery in crude oil prices overnight lessens the threat to US crude oil production, which could mean US gas supply would benefit from joint wells. There was a report overnight that the European Commission will propose a ban on new Russian gas deals by the end of this year and a ban on imports under existing contracts with Moscow by the end of 2027, which would support demand for US LNG. The early Reuters poll for this EIA gas storage report has range of expectations calling for a net build of 96 to 107 bcf for the week ending May 2. The five-year average change is +82 bcf for the week.
CRUDE OIL
June Crude Oil is higher this morning after bouncing off its lows yesterday. In its selloff yesterday off the OPEC+ decision to raise production another 410,000 barrels per day for June, the market managed to avoid a retest of the April low, perhaps because the move had been telegraphed last week. The selloff yesterday may have also attracted Chinese buyers, who were back at work after the May Day holidays last week. Reports that Saudi Arabia actually raised its prices for Asian buyers in June may have also lent support. Lower crude oil prices could ultimately pressure US shale production, or at least cause it to level off. The early Reuters poll for this week’s inventory reports has an average expectation for US crude oil stocks to be -2.5 million barrels for the week ending May 2, with gasoline expected to be -1.5 million barrels and distillates -2.7 million. Refinery runs are expected to be down 0.9% to 85.7%.
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