Written Commentary
CRUDE OIL
August Crude Oil is higher this morning and has reached its highest level since April 4. The Baker Hughes rig count showed US oil rigs in operation were down 9 last week to 442. This was down from 492 rigs a year ago and just above the five-year average of 440. It is also the lowest rig count since October 2021 and may be some indication that US wells are responding to higher OPEC+ production and the threat to US exports to Europe and Asia. On the bearish side, data released today showed China’s crude oil imports in May fell to their lowest daily rate in four months to an estimated 10.97 million barrels per day, down 3% from April and down 0.8% from a year prior. In the first five months of 2025, China imported 11.1 million bpd, up 0.3% from the same period a year earlier. China’s PPI declined for a fourth straight month in May and was down 3.3% from a year earlier, which is another bearish factor for demand. Traders will be watching the US-China trade talks in London today, as a positive result could indicate a step close to some resolution on the tariff issue.
NATURAL GAS
July Natural Gas is lower this morning after closing at its highest level since May 14 on Friday. The Baker Hughes rig count showed US natural gas rigs in operation were up 5 last week to 114. This was up from 98 rigs a year ago and above the five-year average of 111 and was the highest since March 2024. However, a drop in the crude oil rig number brought the total rig count to 559, down from 563 last week and the lowest since November 2021. The suggests that joint oil/gas rigs numbers could be down, which would limit output despite the increase in gas rigs. The 6-10 and 8-14 day forecasts point to a warming trend that could pull domestic cooling demand higher. LSEG forecast average gas demand in the lower 48, including exports, to increase from 95.4 bcfd last week to 97.7 bcfd this week and 100.4 bcfd next week.
PRODUCTS
July RBOB is higher this morning but trailing the progress in Crude Oil, as high refinery rates and lower demand contributed to a substantial jump in US gasoline stocks in last week’s EIA update.
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