Written Commentary
CRUDE OIL
July Crude Oil was lower early Wednesday on the belief that progress was being made on reopening the Strait of Hormuz. Even the US strikes over the weekend and Israel bombing Lebanon do not seem to have derailed those hopes, and the market broke below the low established on Tuesday in the wake of the US strikes. The recent movement of a few ships through the strait may also have traders discounting some of the dire forecasts last week that the interruption of some 20% of global oil supply was coming to a head. For the inventory reports this week, the early Reuters poll has an average trade expectation for US crude oil stock to be -4.4 million barrels for the week ending May 22. Gasoline stocks are expected to be -2.9 million barrels and distillate stocks -2.0 million. Refinery runs are expected to be +0.8% to 92.4%.
PRODUCTS
Product prices were both lower early Wednesday, extending their selloffs from Tuesday in line with crude oil as traders continue to lean towards the idea that the Strait of Hormuz would be opened. For the inventory reports this week, the early Reuters poll has an average trade expectation for US gasoline stocks to be -2.9 million barrels for the week ending May 22,with distillate stocks expected to be -2.0 million.
NATURAL GAS
July Natural Gas was higher early Wednesday after falling to its lowest level since May 7 earlier in the session. A mixed weather forecast across the US lower 48 states does not point to any excessive cooling demand. For the EIA gas storage report this week, the early Reuters poll has for US crude gas storage to be +83 to +101 billion cubic feet for the week ending May 22. The five-year average change for the week ins +97 bcf. As of last week’s update, storage was +0.7% from a year ago and +5.3% above the five-year average.
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