The Energy Complex Is Drifting Lower This Morning

The energy complex is drifting lower this morning, with the prompt month gasoline futures contract leading the way, trading 7.5 cents under yesterday’s settlement. Diesel futures are down around 3.5 cents and the American crude oil benchmark is trading 60 cents per barrel lower so far this morning.

Oil prices were firmly in the red for most of yesterday’s formal trading session until news broke detailing a new wave of US sanctions targeting Iranian petrochemical companies and their brokers. The latest round of crackdowns on the theocracy will likely further curtail their oil exports, and put more pressure on an already strained global supply shortage.

French, German, and Italian leaders visited the capital city of Ukraine yesterday as the war-torn nation is in talks to join the European Union. Putin responded by cutting natural gas exports to European countries, causing regional prices to surge. It will be interesting to see, when/if this war ends, if Gazprom will restore natural gas supplies to their former trade partners, or keep a tight lid on exports and continue to enjoy disproportionately higher profits.

Equity markets were sent reeling yesterday as traders wrestle with the largest interest rate increase in nearly 30 years and recession fears take center stage. It seems that another hike is on the way in July, in an effort to tame the rampant inflation we’ve enjoyed for the past few months. Analyst forecast the interest rate to be about 3.4% by the end of the year and 3.8% by the end of 2023. The S&P 500 is poised to close with the largest weekly loss since 2020.

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