The worst of Hurricane Beryl appears to have passed and now the market awaits an assessment of damage to energy infrastructure along the Texan coast. Early indications suggest that most energy infrastructure has come through unscathed. Some refineries, offshore oil and gas platforms, ports and LNG facilities were shut as a precaution. Some of this infrastructure is already resuming operations, such as the Port of Corpus Christi – a key crude oil export hub for the US. The price action in crude oil and refined product cracks also suggests the market is little concerned about potential disruptions. Front-month WTI futures settled 1% lower yesterday. US Gulf Coast cracks were little changed, while diesel cracks traded weaker yesterday.
Delayed COT data from the CFTC shows that the managed money gross short in NYMEX RBOB increased by 5,093 lots over the last reporting week to 36,729 lots. This is the largest short held by speculators in RBOB gasoline since 2017. In the lead-up to the summer driving season, there have been concerns over the performance of gasoline demand, which is trending below year-ago levels.
The EIA will release its latest Short-Term Energy Outlook today. This will include its latest US oil and gas production forecasts for the remainder of this year and 2025. Last month the EIA forecast that US crude oil production would grow by 310k b/d YoY to a record 13.24m b/d in 2024, and then a further 470k b/d in 2025 to 13.7m b/d. For natural gas, last month the agency forecast that US dry natural gas production would fall 1.7bcf/d YoY to 102.1bc/d in 2024, before growing 2.3bcf/d in 2025. The US oil rig count has fallen further over the last month, which could lead to some small revisions lower.
European natural gas prices came under pressure yesterday. TTF settled 2.36% lower on the day taking that market to its lowest level since mid-May. There had been some concern that hurricane activity in the US Gulf of Mexico could disrupt LNG exports. European gas storage continues to look very comfortable at around 79% full – similar to the level seen at the same stage last year. We continue to hold the view that in the absence of supply disruptions, TTF should trade lower from current levels.