LNG Export Applications Move Ahead

CRUDE OIL

The crude oil market may be finding some support this week as last week’s expectations of Iranian supply returning to the global market faded after Iran’s Supreme Leader Ayatollah Ali Khamenei overnight voiced doubts over whether nuclear talks with the US will lead to an agreement. This follows contretemps over the weekend over whether an agreement would allow any uranium enrichment at all. Trump indicated he was not ready to follow Europe in expanding sanctions against Russia. China’s crude oil imports of around 11.69 million barrels per day in April were lower than March but still up 7.5% from a year ago. Middle East crude benchmark spot premiums of Oman, Dubai, and Murban ticked up on Tuesday after falling to two-week low levels in the previous session. The CEO of ConocoPhillips said today that US shale oil output would flatten out if prices remained where they are now and will start to decline if prices fall below $60 per barrel. Saudi Arabia is expected to burn more crude oil for power generation this summer than last, which could help ease some of the oversupply that is expected to result from OPEC+ lifting some of its quotas.

NATURAL GAS

July Natural Gas is higher today after falling to its lowest level since April 28 yesterday. The US Department of Energy said it will begin approving or rejecting pending applications for permits to export liquefied natural gas to countries with no free trade agreements with the US after releasing a final study on the impact of further exports. This could help increase offtake of US gas production at a time when weekly storage has been growing at a faster than normal pace. The Trump administration has also lifted a month-old stop-work order on a $5 billion wind farm project off the coast of New York in a compromise with NY state that could mean the revival of plans to build a gas pipeline from Pennsylvania, which had been blocked on environmental grounds in 2020. The 6-10 day forecast shows below normal temps across the Midwest to the East coast with above normal temps expected out west, but on the whole not as extreme or widespread as they were last week. The 8-14 day is a little more moderate. For the EIA gas storage report this week, the early Reuters poll has range of expectations calling for US supply to show a net injection of 108 to 120 bcf last week.

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