Your Daily Energy Report for June 12, 2024
Posted on 2024-06-12
Crude Oil
Crude Oil futures for July settled up $.60 or .77% at $78.50. Oil prices increased on Wednesday, driven by continued tensions in the Middle East. However, gains were limited by the Federal Reserve's announcement that interest rate cuts might not occur until December, following their two-day meeting. U.S. Secretary of State Antony Blinken mentioned that Hamas had made numerous, often impractical, changes to a U.S.-supported ceasefire proposal with Israel in Gaza, but mediators remain committed to finding a resolution. Although the conflict hasn't significantly impacted global oil supply, the perceived risk has led to higher crude futures prices. Additionally, investors were let down by the Federal Reserve's indication that rate cuts might be postponed until December, with only a modest reduction expected this year to manage inflation. Higher borrowing costs can slow economic growth, potentially reducing oil demand.
Natural Gas
Natural Gas futures for July settled up $.223 or 7.674% at $3.045. Natural gas futures fell on Wednesday morning after a sharp rise on Tuesday. The U.S. Federal Energy Regulatory Commission (FERC) has given the green light for the mountain valley pipeline, a $7.85 billion natural gas pipeline in Virginia, to start operations. This pipeline, the only significant one currently being built in the U.S. Northeast, has encountered various regulatory and legal challenges since its start in 2018. New EIA data indicates a 1% drop in U.S. marketed natural gas production for 2024, primarily due to substantial decreases in the Haynesville (9%) and Appalachia (4%) regions caused by low prices. With moderate supply growth, regulatory changes, and high summer demand, the natural gas market outlook remains cautiously optimistic.