Crude Supply Panic Eases

CRUDE OIL

May Crude Oil was lower early Tuesday, inside the bottom half of Monday’s extremely wide range. At its peak on Monday, the market had reached its highest level since the early months of the Russia/Ukraine war. President Trump said in a press conference Monday evening that the Iran war could be nearing its end. He described the war as ahead of schedule and said the US had already inflicted serious damage and predicted the conflict would end before the four weeks he had initially set out. He also stopped short of repeating declarations from previous days that Iran must accept an “unconditional surrender” and let him choose its leader. Iran’s Revolutionary Guards said on Tuesday they would not let any oil out of the Middle East until US. and Israeli attacks cease, and Trump threatened to hit Iran “twenty times harder” if it blocked exports. Trump also told Fox News in an interview on Monday that it’s possible he would be willing to talk with Iran, the network reported on Tuesday. Tehran residents reached by Reuters described intense US-Israeli bombardment of the capital overnight as the fiercest of the entire war so far. A source familiar with Israel’s war plans told Reuters the Israeli military was operating under the assumption that Trump could order an end to the war at any time, and was taking advantage of the opportunity to inflict as much damage as possible before the window for further strikes closes. US Energy Secretary Chris Wright said on Monday that the US is considering coordinating sales of oil from the US Strategic Petroleum Reserve with releases from other countries. He also said the US has “other options” on allowing more sales of Russian oil held in tankers on the water in Asia.

PRODUCTS

Like crude oil, product prices were lower Tuesday and inside the lower part of Monday’s wide ranges. Clearly an end to the conflict and a reopening of the Strait could spark a bigger selloff, but the wide range from Monday leaves plenty of room for back and forth as the market reacts to the development in the Iran war and comments about a potential end to the bombing of Iran.

NATURAL GAS

May Natural Gas was lower early Tuesday as the market calmed down following a spike higher on Monday in reaction to the Iran war. Global gas prices have surged with the interruption to LNG shipments through the Strait of Hormuz and to production by key LNG exporter QatarEnergy. The US market is insulated from this because the US LNG shipments are already near their limits. The 6-10 day forecast has below normal temperatures covering most of the eastern half of the lower 48  states, with a gradual retreat expected north and east in the 8-14 day. Above normal temperatures are expected from the West Coast into the Great plains in the 6-10-day, with an expansion eastward into the western Midwest and Delta regions in the 8-14-day. This cooler trend could keep heating demand above normal over the next couple of weeks.

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