Sept Nat Gas Sharply Higher Overnight

NATURAL GAS

September Natural Gas was sharply higher overnight, and has expanded on its recovery from a contract low last week. Hotter than normal temperatures are expected to return to the Plains, Midwest, and Northeast over the next two weeks, with the mid-South being closer to normal and the area of cooler than normal temperatures shrinking to only a portion of Texas. An LNG tanker was docked at the Freeport terminal for the first time in two weeks on Friday evening, which raised hopes that exports a resuming after being interrupted by Hurricane Beryl. This should help increase offtake of US gas supply. US gas rigs in operation expanded by 3 last week to 103, their highest since May. The Commitments of Traders report showed managed money traders were net sellers of 23,733 contracts of Natural Gas for the week ending July 19, increasing their net short to 58,050. This is a small when compared to the record net short of 330,133 from February 2020.

CRUDE OIL

September Crude Oil was slightly lower overnight after its steep selloff on Friday, when it fell to its lowest level since June 17. Disappointing economic data from China last week raised concerns about demand, and those concerns were reaffirmed yesterday with a report that China’s total fuel imports for the first half of 2024 fell 11% from a year ago. June imports were down 31% from May and 45% from a year earlier. The Peoples Banks of China said today it would cut the policy interest rate on seven-day reverse repurchase agreements to 1.7% from 1.8%. Russia’s Taupse oil refinery, its biggest on the Black Sea, was damaged in a Ukrainian drone stroke overnight. Ukraine has been targeting Russian energy infrastructure  in an attempt to disrupt Russia’s economy. A Reuters poll of economists suggested that Saudi Arabia’s economic growth will be one of the slowest among the Gulf Cooperation Council this year due to the extended OPEC+ output cuts, and this has some economists thinking that quotas will be increased sooner than previously expected. Sources told Reuters that OPEC+ is unlikely to change policy at the August meeting and that they will leave in place the plan to start to unwinding some of their production cuts in October. US oil rigs in operation fell by 1 last week to 477, their lowest since December 2021. Friday’s Commitments of Traders report showed managed money traders were net buyers of 10,745 contracts of crude oil for the week ending July 19, increasing their net long to 263,549. This is their largest net long since October but well short of the record net long of 496,000 from January 2018.

PRODUCT MARKETS

The weekly Commitments of Traders report showed managed money traders were net sellers of 5,149 contracts of RBOB for the week ending July 19, reducing their net long to 31,159, which is modest compared to the record net long of 132,000 from 2018. September RBOB fell below the 50-day moving average on Friday, and that line, 2.4291 acts as initial resistance today. Look for support at 2.381. In ULSD, managed money traders were net sellers of 3,312, increasing their net short to 10,340. This is a modest net short and far from the record 45,372 from 2015. September ULSD support comes in at 2.4053 and 2.3900, with resistance at 2.4682 and 2.4992.

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