Written Commentary
CRUDE OIL
The drone attacks on oilfield in Iraqi Kurdistan have moved into their fourth day, and they have lowered the region’s output to from 280,000 barrels per day to around 130,000. No group has claimed responsibility for the attacks, but officials suspect Iran-backed militias. Iraq’s government also announced that oil exports from Kurdistan to through a pipeline to Turkey will resumed after a two-year halt. Baghdad said the Kurdistan Regional Government (KRG) will immediately begin delivering at least 230,000 barrels per day to state oil marketer SOMO for export under a new agreement approved by the federal cabinet. However, some sources said the restart was not imminent. The European Union on Friday agreed a new package of sanctions against the Russia oil and energy industry that would include a move price cap on Russian crude at 15% below the average market price
NATURAL GAS
September Natural Gas is higher this morning, as the warm weather forecast for the US continues. The latest 6-10 and 8-14 day forecasts call for above normal temperatures across most of the lower 48, with the cooler than normal covering only the west of the Rockies to the west coast, which is a smaller area than yesterday’s forecasts showed. Yesterday’s EIA Gas storage report showed net storage for the week ending July 11 at 3,052 bcf, +46 bcf from 3,006 the previous week. This was right at the average trade expectation (range +38 to +53), and it continued the trend of coming in above the five-year average. Storage was down -4.9% from a year ago and 6.1% above the five-year average versus -6.0% and +5.8% the previous week. The US National Hurricane Center on Thursday downgraded the chance that a tropical system off the coast of Louisiana and Mississippi would strengthen into a tropical cyclone over the next week to just 10%, from a 40% chance on Wednesday, which is supportive to gas prices as it limits the likelihood of interruptions to demand and LNG offtake.
PRODUCTS
ULSD is leading the complex higher with US distillate stocks still the lowest in years, with the September contract reaching it highest level since the big reversal lowered day on June 23. Gasoline lags the complex, as US gasoline stocks are near average for this time of year and implied demand has been sluggish.
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