Nat Gas Lower as Warm Weather Coming

CRUDE OIL

September Crude Oil extended yesterday’s lower move overnight but was back near unchanged this morning. The bulls were disappointed yesterday when Trump’s threatened sanctions against Russian oil over the Ukraine war included a 50-day deadline, and the market backed off after trading to its highest level since June 23 earlier in the session. Ahead of the announcement there was talk that a more draconian threat of sanctions was in the works. Trump also announced new weapons for Ukraine and had said on Saturday he that he would impose a 30% tariff on most imports from the European Union and Mexico starting August 1, which may undercut solidarity with NATO over the Russia issue. However, the US has also committed to send  more arms to Ukraine, which might contribute to heightened anxiety and support a bullish posture towards the crude complex. Reuters reports that China’s crude oil throughput increased to 62.24 million metric tons (roughly 15.15 million barrels per day) in June, up 8.8% from May and 8.5% a year ago, based on data from the National Bureau of Statistics. China’s second quarter GDP grew 5.2% year on year, down from +5.4% in the first quarter but slightly above expectation for +5.1%. The June data showed weaker retail sales and stronger factory output, but there are concerns about a slowdown ahead as the US tariffs kick in and the support from frontloading the tariffs fade. Kazakhstan’s oil output for the first half of 2025 was up 11.6% from the same period in last year.

NATURAL GAS

September Natural Gas was lower overnight, but it held most of the gains it garnered yesterday after the weather forecast turned hotter for next week. The 6-10 and 8-14 day forecasts show above normal temperatures dominating over the lower 48 US states, with the exception of some below temps normal along the California coast and in the northern Rockies. For the storage report this week, the early Reuters poll has an range of expectation calling for a net injection of 38 to 52 bcf last week. The five-year average change for the week is +37 bcf. LSEG said average gas output in the Lower 48 rose to 106.8 billion cubic feet per day so far in July, up from a monthly record high of 106.4 bcfd in June.

PRODUCTS

For the inventory reports this week, the early Reuters poll has an average trade expectation for US gasoline stocks to show a decline of 700,000 barrels for the week ended July 11, with distillates expected to be +700,000. As of last week, distillates stocks were the lowest since April 2005, but gasoline stocks were above the four year average for this time of year.

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