Comments below are from Trading Economics:
WTI crude oil futures tumbled 7.2% to settle at $68.50 per barrel on Monday, after Iran’s missile strike on a US airbase in Qatar resulted in no reported casualties, easing fears of an immediate escalation in Middle East tensions.
> The attack, launched in retaliation for US strikes on Iran’s nuclear facilities, was intercepted by Qatari defenses, prompting a sharp retreat from $74.30—the highest level since January.
> While markets are now pricing in a potential de-escalation, significant risks remain—chief among them the threat of Iran attempting to close the Strait of Hormuz, a vital chokepoint for about 20% of global oil flows. Although Iran’s parliament reportedly backed the move, the final decision rests with the country’s national security council.
> US officials, including Secretary of State Marco Rubio, warned that such a step would be “economic suicide” for Iran and urged China—its largest oil customer—to intervene.
US natural gas futures dropped nearly 5% to $3.7/MMBtu, retreating from last week’s 11-week high of $4.09, as rising production and forecasts for an easing heat wave pressured prices.
> While recent extreme heat across the eastern US had boosted power demand and prices, meteorologists expect above-normal temperatures to persist only through early July.
> LSEG reported average gas output in the Lower 48 states rose to 105.5 bcfd in June, up from 105.2 bcfd in May but still below March’s record 106.3 bcfd due to earlier maintenance.
> Meanwhile, gas flows to the eight major US LNG export plants fell to 14.1 bcfd in June from 15.0 bcfd in May, largely due to seasonal maintenance.
> Markets remain cautious amid ongoing geopolitical tensions in the Middle East, with traders closely watching for Iran’s response to recent US strikes on its nuclear sites. Any escalation risks disrupting LNG shipments through the vital Strait of Hormuz, which handles around 20% of global LNG flows.
MY TAKE: The NYMEX futures contracts for JUL25 will expire in a few days. With so much uncertainty in the energy markets, the Paper Traders are closing out their long positions and the contracts can't get any bids. Unless Iran is willing to an accept an unconditional surrender, I don't see the conflict with Israel ending quickly.
Dan Steffens
Energy Prospectus Group |
