Written Commentary
CRUDE OIL
Crude oil and the products saw divergent price action on Thursday, but they remain close to their 2022 highs coming into today’s action. As focus shifts towards macroeconomic factors with all eyes seemingly on the release of the CPI data this morning, the energy complex could be vulnerable to profit-taking and long liquidation today. July crude oil stayed in a relatively tight trading range on Thursday before finishing with a moderate loss, but it has shaken off early pressure and is support this morning.
Both RBOB and ULSD held the upper hand on crude oil yesterday, with ULSD reaching a new high for the move. It continued to make gains overnight, while RBOB was closer to unchanged. Distillate stocks reached an 8-week high in this week’s EIA report, but they remained close to their lowest levels since mid-2005. Implied gasoline demand reached its highest reading for 2022, and it is expected to remain strong during the North American summer driving season, unless high prices take their toll.
NATURAL GAS
Natural gas traded in a relatively narrow range overnight, right in the middle of the range of the last two sessions. The July contract followed through on Wednesday’s wide, sweeping, outside-day down with heavy losses and a move to a 2 1/2 week low early yesterday, but it bounced off its lows to finish with a gain on the day. The Freeport LNG export facility will be shut down for three weeks following Wednesday’s explosion. This will create an export bottleneck, as it accounts for 20% of US LNG processing capacity. Yesterday’s EIA storage report showed a build that was below market expectations, and that lent support to the market.
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