New York crude futures have traded in a narrow range between $102-$103 per barrel this week as the markets reacted to changing headlines. London futures followed a similar pattern trading between $107 and $108 a barrel. Both markets closed Wednesday at the high end of the range with New York at $103.12 and London at $108.03 a barrel.
The weekly stocks report showed US refining continued to run at unusually high levels resulting in a continued drawdown in crude inventories and a concomitant increase in gasoline and distillate stocks. Profit margins for refineries are still good which is supporting the highest level of refining since 2005. Crude stocks at Cushing, Okla. took a 1.45 million barrel drop to 18.8 million.  Some traders are wondering if there will be enough crude meeting WTI specs at the storage facility to meet the needs for physical delivery on futures contracts.  Interestingly, the EIA says that US crude production last week fell by 27,000 b/d to 8.56 million after rising rapidly in recent weeks.
US natural gas futures continued to fall this week closing at $3.76 per million BTUs, an eight month low, on Wednesday. Forecasters say the mild weather in the northern US will continue on into August with the weather in the central US being even cooler than previously expected. US natural gas production may now be surpassing 70 billion cu ft. per day for the first time ever.
The week’s news was dominated by the Malaysian Air jetliner shot down in Ukraine and deteriorating relations between the West and Russia. More sanctions on Moscow are being planned including some that may impact oil production contracts between Russian and Western firms. Several major oil companies are operating in Russia at the minute. Until now the West has been reluctant to impose tough sanctions on Russia although this is clearly changing in the wake of Moscow’s role in the Air Malaysia incident.
The various Middle Eastern wars and insurgencies continue to bump along with little direct impact on oil exports – so far.  Baghdad is making little progress in efforts to drive back the ISIS insurgents who continue to move slowly closer to Baghdad and set off bombs in the city. The large refinery at Baiji north of Baghdad is still in government hands, but is surrounded and no longer in operation. Baghdad’s threats of lawsuits and retaliation against buyers seem to be keeping the Kurds from selling their oil on the international market.
Some 700 have been reported killed in a battle 150 miles northeast of Damascus for a natural gas field that supplies fuel for central Iraq’s power stations. Should the ISIS succeed in capturing this field, the Assad government could be in a bad way with a much-reduced electricity supply.
Despite the continued fighting in major Libyan cities and the evacuation of many western oil company workers, traders remain optimistic that substantial oil exports will resume soon. Fighting at Tripoli’s airport has closed the facility indefinitely. Despite the theoretical reopening of several export terminals in June, it is not clear that much oil has actually been exported.
Iran will be allowed to keep its oil exports steady as the nuclear talks continue for another six months. Tehran’s heavy involvement in the Iraq, Syrian, and Gaza fighting makes it likely that new factors will become relevant to the talks before the next four months are over.