Written Commentary
The Ghost in the Machine Q1 2026
March 26, 2026
CRUDE OIL
June Crude Oil was hovering near the low end of Wednesday’s range overnight, as the market continues to lean toward the idea that some sort of agreement will be worked out between the US and Iran that will result in the reopening of the Strait of Hormuz. Apparently Saudi Arabia’s Al Arabiya news channel reported that understandings have been reached to ease the US blockade in exchange for a gradual reopening of the strait, and Israel’s Channel 12 reported that Iran allegedly agreed to transfer its stockpile of 60% enriched uranium to a third country. Reuters could not immediately verify the contents of either report. On the other hand, even if the blockage is lifted, from a supply perspective, things will likely get worse before they get better, as it could take weeks for oil shipments to resume, much less for the oil to be processed. This could keep supplies tight well into the summer months.
PRODUCTS
According to the EIA, US gasoline and distillates stocks are below year-ago and five-year average levels. Gasoline stocks at 219.795 million barrels are the second lowest for this point in the season in at least six years and are close to the 217.711 million registered at this point in 2023. Distillate stocks at 102.344 million barrels are the lowest overall in at least six years.
NATURAL GAS
July Natural Gas was lower early Thursday near the lower end of Wednesday’s range down action. The market bounced last week after falling to its lowest level in 18 months, but it sold off after it failed to push through the April 22 high on Monday. The US market is facing ample supply despite tightness around the world, as US LNG exports are limited by capacity restraints. With more LNG facilities coming on one, the US export capacity will gradually increase. A drop in production this month coupled with a cooler trend this week may at least allow for a slowdown in the season supply build in the US.
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