Saudi Price Hike Lending Support

CRUDE OIL

August Crude Oil is hanging out near the bottom of last week’s range, but it has a lot of room on the upside to consolidate or correct the steep selloff from last Monday’s high. News this morning that Saudi Arabia may raise its August crude oil prices for buyers in Asia by 50-80 cents is lending support. For the inventory reports this week, the early Reuters poll has an average expectation for crude oil stocks to be -2.3 million barrels last week, with distillates expected to be -1.7 million and gasoline +0.7 million. Refinery runs are expected to be +0.4% to 95.1%. The monthly EIA update showed US crude oil production hit a record 13.47 million barrels-per-day in April, up from 13.45 million in March. The March number was revised down from a previous estimate of 13.49 million. Last week’s EIA report showed US crude oil and distillate stocks were the lowest for this point in the season in at least six years. Gasoline stocks were below a year ago and below the five-year average, but they were up from this point in 2022 and 2023. OPEC+ is expected to lift its production quota by another 411,000 barrels per day (bpd) in August after similar increases in May, June and July.

NATURAL GAS

August Natural Gas fell to its lowest level since December 20 overnight, as the forecasts have turned less warm than they were yesterday and there has not been the kind of heat build up that would alter the weekly increases in supply. World Weather Service has low confidence for a strong ridge of high pressure in North America for the next two weeks. The 6-10 day forecast still shows above normal temperature across most of the lower 48, but the 8-14 day has a return of near normal conditions across the central Plains, Midwest, northern Delta, Great Lakes and the northern Atlantic Coast. LSEG estimated 199 total degree days over the next two weeks, compared with 234 estimated on Friday. The normal for this time of year is 170. It also forecast average gas demand in the Lower 48, including exports, dipping slightly to 105 billion cubic feet per day (bcfd) next week from 105.4 bcfd in the current week. For the EIA storage report this week, the early Reuters poll has a range of expectations calling for a net injection of 47 to 59 bcf last week. The five-year average change is +78 bcf.

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