Written Commentary
CRUDE OIL
Oil prices are lower this morning as traders assess the threat of sanctions on Russian oil and President Trump’s attempts to pressure Moscow into resolving the war in Ukraine. Indian state refiners have reportedly stopped buying Russian oil in the past week, which may be in deference to the threats of placing 100% tariffs on any nation that receives Russian oil. India is world’s third-largest oil importer and has been the biggest buyer of seaborne Russian crude. The market saw some pressure yesterday from the EIA report, which was bearish against expectations for crude oil and distillates and bullish for gasoline, with crude oil stocks +7.7 million barrels last week versus -1.3 million expected. This was even larger than the +1.54 million that API reported. Gasoline stocks were -2.7 million barrels vs -0.6 million expected, and distillate stocks were +3.6 million barrels vs +0.3 million expected. Crude oil stock are up 11.6 million barrels for their low in mid-June. The increase is contra-seasonal, as stocks tend to decline into mid-September. Distillate stocks are up 10.7 million barrels from their historic low on July 4.
NATURAL GAS
September Natural Gas is lower again today and is approaching the November 1 low at 2.970. The 6-10 and 8-14 day forecasts look warmer than they did yesterday at this time, but it is getting late in the season for that to have much effect on US supply, especially with US production running at record levels. For the storage report this week, the Reuters poll has an average trade expectation for natural gas supply to show a build of 37 billion cubic feet for the week ending July 25 (range +21 to 49 bcf). for the week ending July 25. The five-year average change for the week is +28 bcf. If the report comes in as expected, storage will be down 4.4% from a year ago and 6.3% above the five-year average versus -4.9% and +6.1% the previous week.
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