Brent crude is leading the energy complex higher to start the week, as it appears concerns over production declines in Libya, Iran and Venezuela are carrying more weight than reports of production increases in Russia and Saudi Arabia today. Refined products continue to follow Brent’s lead, and although the choppy action thus far in July has left them in neutral territory from a short term technical perspective, the longer term bull trends are still intact, and could drive higher prices this summer.
Tropical Storm Chris is churning off the Carolina Coast this morning, and is forecast to become a hurricane in the next 2 days. Forecast models keep this storm far enough East to dodge a US landfall, but it could create some shipping headaches as it makes its way north. The former hurricane known as Beryl is weakening rapidly as it makes its way into the Caribbean, and is forecast to have minimal impacts beyond some isolated heavy rains.
After 2 weeks of declines, the count of active oil rigs in the US increased by 5 last week according to Baker Hughes. The total of 863 active oil rigs matches the high for the year, and is 100 rigs more than were operating this time last year. The increase in US drilling activity seems to be a driver in WTI’s underperformance relative to the rest of the complex so far today.
The weekly commitments of traders report from the CFTC was delayed due to the holiday last week, but the ICE COT report showed money managers adding a modest 4,000 contracts to their net long position on the week.