Yet IEA says that the market does not face an impending supply crunch. By July, OPEC+ will still have close to 6 mb/d of effective spare production capacity, excluding some 1.5 mb/d of Iranian crude now shut in by sanctions. The bloc’s monthly calibration of supply may give it the flexibility to meet incremental demand by ramping up production. IEA, I would not bet on that.
The API reports also showed a big drop in crude supply yet a surprisingly large increase in gasoline supply. The API showed that crude was down by 3.608 million barrels as Cushing, OK rose by 917.00 barrels. Yet more than likely a flood of gasoline imports caused an increase of 5.565 million barrels of supply. Yet a -3.006 drop in distillates gave the report an overall bullish tilt.
Natural gas may have finally bottomed. Andrew Weissman of EBW Analytics says that the May natural gas contract closed at $2.619/MMBtu on Tuesday—up 16.6¢ (6.8%) from last Tuesday’s intraday low—as rising spot market demand and bullish weather shifts helped reverse the meek narrative of the past six weeks.
While momentum may carry the front-month higher later this week, challenges remain next week as heating demand relaxes, record pipeline exports to Mexico weaken, and LNG flows dip on maintenance. Still, rising planned injections by Local Distribution Companies and modestly supportive weather reduce the likelihood of any significant price declines. By the 30–45-day window, bullish demand catalysts abound for natural gas. And the mere absence of the bearish weather that hung over the market for most of the past six months could make way for strong core fundamentals to drive futures higher.