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Increasing Heat Intensity Across Most US Territory


Moderating temperatures in the northern US may ease natural gas demand, but the forecasts show increasing heat intensity over the southeast quadrant of the lower 48 and above normal temperatures across at least ¾ of the nation. However, current US supplies appear ample. The weekly US EIA storage report on Friday showed a net injection of 71 bcf for the week ending June 14 versus expectations of +66 to +80. Total gas in storage was 3,045 bcf versus 2,974 the previous week, 2,702 a year ago, and a five-year average of 2,484. LSEG said lower-48 gas output averaged 98.2 billion cubic feet per day (bcfd) in June, up from a 25-month low of 98.1 bcfd in May. News that EU sanctions include two LNG vessels is not expected to have much effect in the near term, unless it can do a better job of enforcing them.


Oil refinery


August Crude Oil is higher this morning but is inside last Friday’s range. The dollar was lower overnight after trading to its highest level since May 1 on Friday, and this was supportive to commodities in general. Crude oil has been buoyed recently by expectations of stronger demand in the Northern Hemisphere this summer. Last week’s EIA report was supportive, as it showed US gasoline stocks declining for the week versus expectations for an increase, and implied gasoline demand has finally started to pick up for the season. On Friday, the Baker Hughes rig count showed US oil rigs in operation falling by 3 last week to 485, the lowest since January 2022. Last week’s EIA report also showed US jet fuel production reaching this highest level since January 2020 at 1.9 million barrels per day, 8% higher than the same week last year and the highest weekly total since January 2020, as refiners anticipate strong demand this summer. JPMorgan said last week that global jet fuel demand has surpassed its pre-pandemic peak for the first time. The EU’s latest sanctions against Russia will include 19 energy-related vessels, including two vessels meant for LNG. This not expected to have much effect in the near term, as these ships already flout western sanctions.



August RBOB may need to see more than one week of strong demand numbers to build on its recent rally. The market traded above the 50% retracement of the April-June selloff on Friday before backing off and closing below it. That level, 2.5062 could be an important resistance level today. A move above there would leave the next upside target at 2.5580. Look for support at 2.4544 and 2.4266. August ULSD fell below its 50% retracement of the April-June selloff on Friday after spending a few sessions above it, and that level, 2.5238, seems to be a magnet.



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