Written Commentary
CRUDE OIL
July Crude Oil is lower this morning after yesterday’s API report showed a surprise increase in US crude stocks last week. The report showed US crude oil stocks were +4.3 million barrels for the week ending May 9 versus an average expectation of -1.1 million (from the Reuters poll). The products were a bit bullish, with gasoline stocks -1.4 million versus -600,000 expected and distillates -3.7 million versus +100,000 expected. The EIA report is out this morning, and we could see a reversal higher if it comes in a the bullish end of expectations. Refinery runs are expected to be up 0.8% to 89.8%. Last week’s EIA report showed US crude stocks at 438.4 million barrels, the lowest since 2022 and 34 million below the a five-year average. The market also faces higher OPEC+ as the group lifts their quota restrictions by 411,000 bpd this month and another 411,000 next.
NATURAL GAS
July Natural Gas extended its losses overnight as it backed off further from the Monday’s high. For the EIA report tomorrow, the early Reuters poll has expectations for US natural gas storage to show a net injection of 104-114 bcf last week. The five-year average change for the week is +87 bcf. Storage went back above the 5-year average last week for the first time since late January. The 6-10 forecast shows cooler than normal temperatures over the northern half of US, and the 8-14 day has the cool temps continuing in the Midwest, Great Plains and northeast. It is late in the heating season, but this could slow the weekly supply build a couple of weeks from now.
PRODUCT MARKETS
The API report late yesterday was bullish for the products, with gasoline stocks -1.4 million versus -600,000 expected (in the Reuters poll) and distillates -3.7 million versus +100,000 expected which has allowed these markets some resiliency against lower crude prices. The EIA report this morning will be the final word. July RBOB resistance comes in around 2.1650, near the 200-day and 100-day moving averages as well as the 0.618 retracement of the selloff from the January high to last month’s lows.
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