Your Daily Energy Report for June 20, 2024
Posted on 2024-06-20
Crude Oil
Crude Oil futures for July settled up $.60 or .736% at $82.17. Oil futures rose on Thursday following a report from the EIA indicating a decrease in crude oil inventories. Additionally, economic data showing a cooling job market raised expectations that the Federal Reserve might reduce interest rates soon. The labor market has weakened alongside the broader economy as the Fed tightened policy to combat inflation. However, with inflationary pressures easing, the possibility of a rate cut later this year remains open. Lower interest rates could bolster oil prices, which have been under pressure this year due to weak global demand. A potential U.S. rate cut would reduce borrowing costs in the world's largest economy, stimulating demand for oil amid increasing production. Geopolitical tensions, including conflicts in the Middle East such as Israeli military actions in Gaza, are also likely to continue supporting oil prices with a heightened risk premium.
Natural Gas
Natural Gas futures for July settled down-$.168 or -5.775% at $2.741. Natural gas futures declined on Thursday as producers increased output to meet higher demand from power plants running air conditioning units. In June, U.S. gas production averaged 98.2 billion cubic feet per day, up from a 25-month low in May. Analysts attribute this production rise to the significant increase in futures prices during April and May. Major gas producer EQT confirmed its increased output earlier this month. Concurrently, meteorologists forecast continued hot weather through atleast July 5, further driving demand for gas from power generators. Although gas flows to major U.S. LNG export terminals are on the rise, they remain below capacity due to maintenance at Louisiana facilities such as Cameron LNG, Cheniere Energy's Sabine Pass, and Venture Global's Calcasieu Pass.