Introducing the Weekly Oil and Gas Market Commentary

Weekly Oil and Gas Market Commentary: July 7, 2023

PW Energy is proud to partner with Tom Seng to bring our clients the LOWEDown, a rich weekly commentary on the oil and gas market. Seng is an assistant professor of professional practice in energy at the Ralph Lowe Energy Institute in the Neeley School of Business at Texas Christian University. 

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Oil – Fundamental Analysis

Crude oil prices stair-stepped higher during this holiday-shortened trade week in the US on strong fundamentals which came in the form of a Saudi Arabia extension of existing outputs cuts and on an across-the-board drawdown in inventories. WTI started the week trading down to $69.70/Bbl. on continuing economic concerns but rebounded to over $73.00 at week’s end. Brent crude, which traded all week*, followed a similar pattern by hitting a low of $74.55/Bbl. Monday and rising to as high as $77.80 most recently. Both grades of oil will settle higher week-on-week. The Saudi oil minister announced last Monday the kingdom’s plan to extend their current output levels into August. Additionally, Russia has indicated it will also reduce August production by -500k Bbld.  The market barely reacted to this bullish news as concerns over demand in China offset this supply deficit and as Russia has pledged cuts before only to continue its exports via black markets. The UAE has stated that it will not make any further cuts despite any decision by the OPEC+ to do so. China’s growth slipped in Q2 and its key market index has fallen 6% in the last (3) months as its post-COVID recovery has been slow. 

The Energy Information Administration’s Weekly Petroleum Status Report indicated that commercial inventories last week fell -1.5 million Bbl., to a total of 452 million Bbl., holding at  -1% vs. the 5-year average for this time of year. The API had forecasted a change of -4.4 million Bbl. while a group of WSJ analysts had called for a change of -1.6 million Bbl. US refineries operated at 91.1%, down from 92.2%, the prior week. Gasoline stocks dropped -2.5 Bbl. to 219.5 million Bbl., holding the deficit to -7% vs. the 5-year average. Gasoline demand increased to 9.4 million Bbld. vs. 9.0 a year ago. Distillate stocks decreased Bbl. -1.0 million Bbl. to 113 million Bbl. and -16% below the 5-year average. Inventory at the key Cushing, OK hub decreased by -1.6 million Bbl. to 42.8 million or 56% of capacity there. Imports of crude oil rose to 7.0 million Bbld. vs. 6.6 the prior week while exports were 3.9 million Bbld. down from 5.3 the prior week. Exports of petroleum products were 5.9 million Bbld. last week vs. 6.4 the prior week. US oil production rose +200k Bbld back to its most recent high at 12.4 million Bbd. vs. 12.1 last year at this time. The Strategic Petroleum Reserve delivered 1.5 million Bbl. as part of a prior 2015 obligation to sell, lowering the total to 347 million Bbl., the lowest level since August 1983. Last week’s US rig count fell to 674, a drop of -8 rigs over the past week. 

OPEC foresees less oil demand growth next year pegging it at +1.5 to +1.7 million Bbld compared to this year’s forecasted increase of +2.4 million Bbld. The cartel has approached Guyana for interest in joining the coalition but was rebuffed. Guyana’s oil production future appears to be rosy as more new offshore discoveries are being developed by the likes of Exxon and CGX/Frontera. Amidst concerns over less capital investment in upstream oil & gas, Rystad Energy points to industry efficiencies as the basis for less money deployed to maintain current production levels. 

US average retail gasoline prices at the pump were most recently at $3.53/gal., -$0.04/gal. from the prior week but -$1.24/gal. less than last summer’s extremely high prices.  

This week’s jobs report indicated an increase of just 209k for last week, the smallest gain in two-and-a-half years. While normally viewed as a negative, the market is interpreting this as accomplishing what the Fed’s interest rate strategy has targeted, a “cooling” of the economy. The unemployment rate is now at 3.6%. (3) major US stock indexes are trading higher today but, the Dow & S&P look to still settle lower week-on-week. The migration from currencies to equities has the US Dollar trading lower which is also supportive of oil prices. 

(*) One is reminded of the old trick question, “Is there a 4th of July in England? Yes, they just don’t celebrate Independence Day”. 

Oil – Technical Analysis

August 2023 NYMEX WTI Futures – Courtesy of

August WTI has moved above its 8-,13- and 21-day Moving Averages on the new rally but is now touching on the Upper-Bollinger Band which could lead to a sell-off reversal. Volume for the week, shown in the second box, has slipped from the average. The Relative Strength Indicator (RSI), shown in the 3rd box, is a momentum indicator and, at “57” is moving toward an “over-bought” position.  “30” or below is considered very oversold while “70” or above is considered very overbought. Resistance is now pegged at $73.50 with Support seen at $71.80, yesterday’s Close. 

Looking Ahead

China appears to be making a slower-than-expected economic recovery but a recovery, nonetheless. Look for a steady increase in their oil imports as a result. Monitoring the Tropics will be a constant through at least October. Gasoline demand is running slightly higher than last year, which may be attributed to lower prices this summer. 

Natural Gas – Fundamental Analysis

August Henry Hub natural gas futures fell from last week’s high in the $2.80s mostly on a larger-than-forecasted storage injection and storms which are moderating temperatures in some regions of the country. Prices ranged  between $2.54 and $2.795/MMBtu, down from the prior week’s range and will settle lower week-on-week. Supply last week was up to 107 Bcfd while demand increased to 100.5 Bcfd vs. 94.5 Bcfd the prior week with the power sector increasing by +4.7 Bcfd. The West-South Central region and New England saw the biggest increases in Cooling Degree Days (CDD) while the Pacific and Mountain areas were below normal in cooling needs. Exports of natural gas to Mexico averaged 6.4 Bcfd while LNG exports rose to 12.8 Bcfd from 11.5 Bcfd. The EIA’s Weekly Natural Gas Storage Report showed a net injection for last week of +68 Bcf while forecasts called for +66 Bcf and compared to last year’s +63 and a 5-year average of +64 Bcf. This brings the total gas in storage to 2.88 Tcf. Inventories are now 25% above last year at this time and +15% above the 5-year average. 4 Bcf of baseload gas was reclassified as working gas so the report indicated a weekly change of +72 Bcf. Gross natural gas production in April reached a record high of 114 Bcfd with Texas achieving a second consecutive month of increased output. 2022 was a record year for global LNG trading rising +5% from 2021 to an average of 52 Bcfd. US LNG exports averaged 10.2 Bcfd last year, up 16% from the prior year. Europe increased its imports by +65%. Europe and China are in competition for long-term US LNG supplies which is aiding several projects in achieving FID. 

Natural Gas – Technical Analysis

August 2023 NYMEX Henry Hub Futures – Courtesy of

August 2023 NYMEX Henry Hub Natural Gas futures have moved back down to around the  8-, 13- and 21-day Moving Averages (MA).  Support is pegged at $2.50 with Resistance now targeted at $2.70. Volume is low at only 80k contracts. The RSI is  “neutral” at “51”. 

Looking Ahead

We should continue to see strong gas-fired generation demand along with smaller storage injections. Increasing production may continue to hold prices down. 


Tom Seng, Ed.D.
Assistant Professor of Professional Practice in Energy
Ralph Lowe Energy Institute
Neeley School of Business
Texas Christian University
TCU Box 298530
Fort Worth, TX 76129

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