Written Commentary
CRUDE OIL
July Crude Oil was higher early Tuesday on lowered expectations that the US and Iran would come to an agreement to reopen the Strait of Hormuz after President Trump described the ceasefire with Iran as being on “on life support,” on Monday. Since the strait close, “breakthroughs” in negotiations have sparked occasional, brief selloffs, but the market may be growing immune to those news events. Saudi Arabia and UAE have managed to bypass the strait in a limited fashion, and there have been reports of some ships making it through by either shutting off their tracking devices by some sort of permission from Iran.
PRODUCTS
July RBOB is approaching last week’s contract highs, as the opportunity for an agreement to reopen the Straif of Hormuz seems remote as ever. US gasoline supplies are the lowest they have been for this time of year in at least six years. July ULSD is also higher, with US distillate stocks the lowest they have been in at least six years.
NATURAL GAS
July Natural Gas was lower early Tuesday after inching above Monday’s high earlier in the session. The market’s inability to take out the double top off the highs at 3.176 from May 4 and April 22 may have disappointed the bulls looking for confirmation that the market put in a major low on April 30. The prospects of “Super” El Nino has raised talk of record heat this year globally, but El Nino does not necessarily bring warmer than normal conditions to the US. If anything, there is a tendency toward cooler summer over most of the nation, except perhaps the PNW and parts of west Texas and the far south. The 6-10 and 8-14 day forecasts have above normal temperatures over most of the lower 48, except for the PND and Northern Plains, near the Canadian border. Temps are already reaching the 100s in the southwest, which will support cooling demand in the near term.
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