Memorial Day in the U.S. and the annual spring bank holiday in the U.K. put a wet blanket on Monday’s crude oil markets. Brent was off about $0.68/bbl as of mid-afternoon in thin holiday trading. That follows a rebound on Friday, when Brent moved $0.69/bbl higher to settle at $76.95/bbl and WTI was up $0.84/bbl to settle at $72.67/bbl.
Last week crude markets were buffeted by a big decline on Thursday when WTI dropped 3.5% due primarily to statements from Russian Deputy Prime Minister Alexander Novak that no new cuts in OPEC+ production quotas should be expected. Putin was out with the same message, saying energy prices are approaching "economically justified" levels. Those statements undercut not so veiled threats from Saudi Energy Minister bin Salman earlier in the week warning oil shorts that they could be hurt after the next OPEC+ meeting scheduled for Vienna on June 4. Friday’s bullish move was mostly attributed to signals from Republicans and the Biden administration that they are getting closer to a debt ceiling deal.
In the final day of trading for the Henry Hub June contract on Friday, natgas was off $0.125/MMbtu to settle at $2.181/MMbtu. But this week’s new prompt July contract settled considerably higher at $2.417/MMbtu, down $0.059/MMbtu, a nice contango boost from the contract roll. Gas demand for power generation remains at seasonal lows, lower-48 production continues to come on strong above 100 Bcf/d and storage inventories are healthy. Given those fundamentals it’s no surprise that natgas prices remain weak.