We have heard a lot about Russian collusion but what about Russian confusion? Oil prices sold off hard after a Russian diplomat claimed there was a significant breakthrough in world power and Iranian nuclear talks and that a major announcement was going to happen today. Later on, the envoy said that he was confused or taken out of context but who really knows because Russian is hard to accurately translate. Yet at a key technical point trading point, the report took the winds out of the sales of the oil market that was in breakout mode. Reports that the beleaguered and hacked Colonial Pipeline had some communication issues also raised fears that maybe there were some leftover issues with the company's computer system after the hack. Yet Colonial is back online and the odds of a quick Iran deal is off the table, as it should be as reports are that Iran is giving support to Hamas which would be a breach of the agreement.

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Iranian rockets, fired by Hamas and Islamic jihad, have rained down on Israel this week, some of them evading the vaunted Iron Dome missile defense system, and killed at least six Israeli civilians according to reports. So remind me why we want to deal with the Iranian government?

Oil is also weak on the risk-off attitude that is mild and being cooked up with talk of inflation fears as well as the old covid worry excuse. Commodity pressure is also being felt with China, which has been driving up demand and is in desperate need of a lot of commodities and is looking at ways to cool red hot prices. The Chinese Premier Li Keqiang is chairing state council meetings looking at ways to stabilize prices and supplies of commodities to maintain a stable economy. Good luck with that. 

The oil market also awaits the Energy Information Administration supply report. Last night the American Petroleum Institute showed crude inventories increased by 620,000 barrels while gasoline inventories fell by 2.8 million barrels and distillate stocks fell by 2.6 million barrels. Those draws in products should lend support to the complex if the EIA agrees. Expect more oil to be released from the SPR.

Andrew Weissman of EBW analytics reports that “the June natural gas contract surged 14.8¢ higher Monday—breaking out of the $2.91-$2.97/MMBtu range for the first time since assuming the front-month position—following a 17 CDD bullish shift in the 1-15 day weather forecast. While the front-month promptly returned two-thirds of Monday’s gain on Tuesday, the pop higher is representative of upside potential for natural gas. Following Monday’s price increase, the gas market still remains 2.3 Bcf/d undersupplied through winter 2021-22. While steep gains are less likely until late June, a bullish spark could quickly ignite NYMEX futures at any time. Near term, the warmer-than-normal weather forecast shift accelerates early-season cooling demand and narrows the spring shoulder season, limiting downside price risks for natural gas.