Written Commentary
CRUDE OIL
September Crude Oil was higher early Friday and managed to take out Tuesday’s four-week high. There has been no letup in the hostilities between the US and Iran, and this is reigniting worries over global supply. The US hit bridges and an airport in Iran overnight, and Iran struck US bases across the Middle East. So far both sided have avoided civilian infrastructure and major economic targets, but both sides are threatening to do so if the other does. The head of the International Energy Agency warned that if more oil doesn’t start flowing through the Strait of Hormuz soon, the world should worry about energy security. Strategic supplies, China stocks, and postponing consumption can’t last forever.
PRODUCTS
Product prices are both higher this morning, as the cutoff of the Strait of Hormuz means reduced refinery activity in Asia and the ongoing war between Russia and Ukraine have cut into Russia’s ability to export diesel and gasoline. There was a report this week that Russia was seeking gasoline from India. US refinery margins have reached record highs.
NATURAL GAS
September Natural Gas was higher early Friday but was confined to the relatively narrow range this week. The market sold off sharply last week off news of new pipeline permissions that could increase gas flows to the henry Hub, the delivery point for the NY futures and also news of 6-7 weeks of maintenance at an LNG export plant that could slow the offtake of US supply. The 6-10 and 8-14 day forecasts are a bit warmer today, as the cooler weather in the northeast quadrant retreats a bit. A cooldown is expected this weekend, but the smoke from the wildfires in Canada is keeping people indoors with their windows shut from Minesota, across the Great Lakes and into the Northeast, which will support air conditioning usage. However, the periods of extreme heat this summer have made little if any dent in US supply.
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