Internal Market Brief

Jul 6

INTERNAL MARKET BRIEFWEEK OF JUN 29 – JUL 3, 2026

WTI held roughly flat, easing from $69.23 to $68.46 as Hormuz outflows and an OPEC+ August hike (+188 kbpd) fed a building glut — the prompt briefly slipped into contango midweek. U.S. crude drew 3.8 MMb but products led, with record crack spreads. Canadian July condensates held near −$4.00 while WCS blew out ~$4.90 YoY into August; AECO slid to ~$1.36 CAD/GJ and Henry Hub eased on an 87-Bcf build.

Published July 6, 2026Contango Commodity Marketing Inc.

At a glance

Weekly Snapshot

Settlements for the week ended July 3, 2026 (July 1 Canada Day; WTI quoted to Thursday July 2). Prices in USD/bbl. Deltas are week-on-week unless noted.

Crude & Positioning

WTI

WTI (Thu Jul 2)$68.46≈ flat wk

Brent (est.)~$70.5≈ WTI +$2, contango

Prior Fri close$69.23

Term structureWTI thin backwdn.Brent/Dubai contango

OPEC June output18.75 MMb/d+2.34 MoM

OPEC+ Aug hike+188 kbpd+940k since war

Futures vs war peak−43%

Supply & Inventories

EIA / IEA

U.S. commercial crude408.4 MMb−3.8 MMb

vs 5-yr average~7% below

Gasoline stocks−2.3 MMbdraw

Distillate stocks+2.5 MMb~8% below avg

Gasoline crack>$50 /bblrecord

Diesel crack>$60 /bblrecord

Section 01 · Crude Oil

WTI — Flat as Hormuz Outflows and an OPEC+ Hike Weigh

WTI eased but stayed relatively flat, slipping from the prior Friday’s $69.23 USD/bbl to $68.46 Thursday as VLCC outflows from Hormuz and a resurgent Gulf supply pushed the prompt briefly into outright contango midweek, before it clawed back to a thin sliver of backwardation by week’s end.

Update
weekend

Over the weekend OPEC+ formalized a +188,000 bbl/d August hike (940k since the war), while the U.S.-backed Oman shipping lane saw ships u-turn — most crossings routed via Iran’s own corridor, signaling the lane stays risky as Iran keeps managing the Strait through its mourning period.

Eased from the prior $69.23 to $68.46 Thu — roughly flat; brief midweek outright contango.
OPEC output +2.34 MMb/d in June to 18.75 MMb/d (Kuwait, Saudi, Iran); Gulf exports topped 10 MMb/d (UAE record ~3.8).
Rebound is mostly stranded barrels drawn off the water, not fresh output — loadings ~half of prewar, ~40% below pre-conflict.
Resurgent supply + soft Chinese demand = a near-term surplus; Brent and Dubai held in/near contango all week.

Fig 1Outbound Hormuz transits stay high but volatile, slowing into early July (ships/day)Source: Commodity Context, Kpler

WTI Daily Settles — Week of Jun 29 – Jul 3, 2026

Prompt month, USD/bbl · Eased from the prior $69.23 to $68.46 Thu (≈ flat) · brief midweek contango, thin backwardation by week’s end

Mon: opens near $68.95, down from the prior $69.23 close, as VLCC outflows from Hormuz keep pressure on · Tue: drifts lower on resurgent Gulf supply; Brent and Dubai sit in prompt contango · Wed: briefly slips into outright contango — the clearest sign of a near-term glut of freed barrels · Thu: settles $68.46; U.S. crude drew 3.8 MMb but products lead — record-high gasoline/diesel cracks · Fri: claws back to a thin sliver of backwardation as OPEC+ readies its +188 kbpd August hike

Fig 2WTI daily settles with key catalystsSource: NYMEX settlements, internal compilation

Supply Returns Faster Than It Was Made

OPEC+ +188 kbpd for August → 940 kbpd of increases since the war began.
Futures −43% from the war-time peak; internal OPEC+ tension as Iraq/UAE resist limits amid glut/price-war warnings.
Watch whether Iran reasserts Hormuz control once the Khamenei mourning period ends.
The Oman lane stays risky — ships u-turned over the weekend, routing via Iran’s corridor instead.

Domestic: Products Lead a Sagging Crude

U.S. commercial crude −3.8 MMb to 408.4 MMb (~7% below the 5-yr average); gasoline −2.3 MMb.
Distillates +2.5 MMb (jet +1.7) but still ~8% below seasonal.
Products sharply outperform: gasoline crack >$50/bbl, diesel >$60/bbl — record seasonal highs.
Cracks at their highest-ever levels relative to the sagging crude price.

Fig 3OPEC crude output (MMb/d) — a June rebound to 18.75 as Hormuz flows normalizeSource: Bloomberg survey

Desk angles

STRUCTURE

Contango Confirms the Surplus

WTI briefly slipped into outright contango midweek while Brent and Dubai held there — the term structure is now telling the surplus story as freed Gulf barrels swamp soft Chinese demand.

SUSTAINABILITY

A Rebound Built on Stranded Barrels

June’s export surge is mostly oil drawn off the water, not new production — loadings run ~half of prewar and Iraq lags. If arrivals into the Gulf slow, the glut could fade faster than the bears expect.

PRODUCTS

Cracks Are the Trade

Gasoline (>$50) and diesel (>$60) cracks are at record seasonal highs versus a sagging crude — refined-product tightness, not flat price, is where margin sits. Constructive for refiners, a tax on crude-long producers.

CANADA

WCS Blows Out Into August

WCS widened to ~−$15.20, about $4.90 wider YoY, on rising Venezuelan heavy/medium and expectations that reopened-Hormuz barrels reach the Gulf Coast — a structural headwind for Canadian heavy.

Desk
view

Bias: heavy front while contango and the OPEC+ supply add persist — but the rebound rests on stranded barrels, so fade extremes both ways. Levels: $68.30 midweek low · $68.46 Thu · $69.23 prior Fri. Producers: July condensates held ~−$4.00 on Gulf Coast pull, but WCS blew out to −$15.20 into August (~$4.90 wider YoY) — hedge heavy exposure and watch Venezuelan/Gulf competition. Watch: Hormuz once mourning ends, OPEC+ cohesion, and the record product cracks.

Risk scenarios — WTI path (glut vs. Hormuz risk)
Scenario	Trigger	WTI path
Bull / Hormuz risk	Iran reasserts control after mourning; Oman lane stays shut; arrivals slow	$74–80 risk-premium snap
Base / heavy drift	Supply keeps returning into soft Chinese demand; contango persists	$65–70, range-bound
Bear / price war	OPEC+ cohesion cracks; Iraq/UAE add barrels; glut deepens	Sub-$65 as surplus builds

Storylines

SUPPLY

Gulf Oil Exports Surge in June

Combined crude and condensate exports from Saudi Arabia, the UAE, Kuwait, Iraq and Iran rose more than 3.5 MMb/d from May to top 10 MMb/d in June as Hormuz flows recovered — though volumes stayed ~40% below pre-conflict levels. UAE exports hit a record near 3.8 MMb/d, over 1 MMb/d above May, as tanker traffic reached its highest pace since the conflict began.

OPEC

OPEC Output Jumps as Hormuz Reopens

OPEC crude output rose 2.34 MMb/d in June to 18.75 MMb/d, a Bloomberg survey showed, with Kuwait, Saudi Arabia and Iran driving the gains as Strait flows normalized under the U.S.–Iran accord. The rebound is creating a surplus in parts of the market as Chinese demand stays soft.

OPEC+

OPEC+ Approves August Quota Hike

Over the weekend OPEC+ agreed to raise its collective output target by 188,000 bbl/d for August, bringing total increases since the war began to 940,000 bbl/d as Saudi Arabia and the UAE restore exports. Oil futures have fallen 43% from their war-time peak, and OPEC+ faces internal tension as Iraq and the UAE push back on limits amid glut warnings.

STRUCTURE

Hormuz Recovery Outpaces Fundamentals

Flows through Hormuz have rebounded faster than expected since the MOU, but the surge is largely a drawdown of oil stranded on the water rather than fresh production — loadings still run near half of prewar levels, with Iraq furthest behind. Resurgent supply into soft Chinese demand has pushed crude into contango, though the pace of tanker arrivals may not be sustainable.

U.S. SUPPLY

U.S. Crude Falls, Products Lead

U.S. commercial crude fell 3.8 MMb to 408.4 MMb (~7% below the five-year average) and gasoline stocks declined a further 2.3 MMb, while distillates built 2.5 MMb. Refined products are sharply outperforming crude — gasoline and diesel crack spreads sit at record seasonal highs above $50 and $60/bbl.

Section 02 · Western Canada

Canadian Differentials — Condensates Firm, WCS Blows Out Into August

July condensates kept tightening, heavies were comparatively stable, and SYN softened — a mix the desk now reads as stronger U.S. Gulf Coast condensate demand and weaker distillate cracks rather than any oil-sands turnaround. The August cycle then opened with WCS widening sharply.

July condensates firmed: C5-PCE NAM −$4.50 → −$4.00; C5-FSPL −$3.90 → −$3.50 (~$0.50 premium).
July sweets volatile: PCE −$1.25 → −$1.50 → −$1.00 Fri; SYN softened $4.43 → $3.15 (distillate cracks, not oilsands).
July heavies steady: WCS −$11.90 → −$11.74; CHV −$11.90.
August: WCS blew out −$13.75 → −$15.20 (CHV −$15.50) — ~$4.90 wider YoY vs −$10.34.
Driver: rising Venezuelan heavy/medium + reopened-Hormuz barrels competing at the Gulf Coast (Valero/P66, RBN’s King).

Fig 4C5-PCE NAM — July holds near −$4.00, August opens firmer (USD/bbl)Source: Contango Commodity Marketing

August opening prints — Western Canadian grades (USD/bbl vs WTI)
Grade	August	Note
C5-PCE NAM (diluent)	−$4.10	firmer bias than July
PCE (sweet)	−$4.20	from −$4.41 Thu
PEM (sweet)	−$4.20	tightened from −$4.30
LSB (sour)	−$6.45	widened from −$5.50
MID (sour)	−$8.25	widened from −$7.50
WCS (heavy)	−$15.20	~$4.90 wider YoY (vs −$10.34)
CHV (heavy)	−$15.50	single Friday print

Tbl 1August opening prints (Thu–Fri)Source: Contango Commodity Marketing

Storylines

HEAVY

WCS Pressured by Venezuela & Hormuz

WCS widened ~$4.90 YoY into August, building on a theme Valero and P66 flagged — rising Venezuelan heavy/medium volumes. RBN’s Martin King adds that pulled-back U.S. Gulf exports, ongoing SPR releases and reopened-Hormuz barrels leave Canadian crude under negative pressure.

PIPELINE

Ottawa Refers West Coast Line to Major Projects Office

The federal government will refer Alberta’s proposed ~1 MMb/d West Coast pipeline — following the existing TMX corridor and respecting the tanker-moratorium act — to Canada’s Major Projects Office, with Canada and Alberta as equal partners plus a meaningful Indigenous equity stake.

PIPELINE

Pembina Details Pipeline Stake

Pembina signed a non-binding Heads of Agreement with Canada, Alberta, Trans Mountain Corp and the APMC to join the corridor via a jointly owned development company — a 10% economic interest through construction (option for +10% at COD), with no at-risk capital before a final investment decision.

PIPELINE

Deal Carries No Cost Estimate Yet

Carney said "the time for action is now" as Canada and Alberta unveiled the government-built line to move oil-sands crude to BC’s southwest — no cost estimate or funding details yet, and no private company has stepped up for a majority stake.

Section 03 · Natural Gas — WCSB

AECO Slides as Injections Surge and Border Flows Fall

Alberta gas declined through the week, with AECO opening Monday at $1.58 CAD/GJ and sliding to a Thursday settle near $1.36 CAD/GJ — resilient of late, but a surge in storage injections and sharply lower Alberta–BC border flows argue against continued resilience into summer.

AECO slid from $1.58 CAD/GJ Monday to ~$1.36 Thursday — resilient lately, but that looks hard to sustain.
Net storage injections surged toward 2.0 Bcf/d, near 5-yr highs (total storage still below 2024/25).
Alberta–BC border flows fell to YTD lows as PNW storage stays elevated; intraprovincial demand below 2024/25.
NGTL early-July maintenance did not constrain USJR field receipts.
Demand pipeline: four BC LNG projects (>3.0 Bcf/d) fast-tracked; Pembina FIDs the ~150 MMcf/d Greenlight power center.

Fig 5NGTL net storage injections (MMcf/d) — surging toward 2.0 Bcf/d, near 5-yr highsSource: TC Energy

Fig 6Alberta–BC border deliveries (MMcf/d) — down sharply to YTD lowsSource: Contango Commodity Marketing

Section 04 · Natural Gas — U.S.

Henry Hub Eases as an 87-Bcf Build Tops Forecasts

Henry Hub traded down over the week, opening at $3.281 USD/MMBtu and rising to a $3.328 high Tuesday on rising LNG feedgas and record-heat forecasts, before easing in anticipation of a larger-than-normal build — which the EIA later confirmed at 87 Bcf, lifting working gas to 2,922 Bcf, 175 Bcf above the five-year average.

Opened $3.281, peaked $3.328 Tue, then eased on a bigger-than-normal build.
EIA +87 Bcf → working gas 2,922 Bcf, 175 Bcf above the 5-yr average.
Heat-dome warnings widened 142.7M → >180M, but demand records didn’t materialize (weaker industrial load).
Qatar pushes a restart (LNG tanker through Hormuz Thu); June global LNG highest since March; U.S. feedgas ~17.4 Bcf/d.

Fig 7U.S. working gas in storage (Bcf) — +87 Bcf to 2,922, 175 Bcf above the 5-yr averageSource: EIA

Storylines

POWER

Gas Jumps 3% on Heat

NYMEX August gas rose ~3.4% to a provisional $3.288/MMBtu Tuesday as rising LNG feedgas and a severe heat wave drove forecasts for record power demand. The August-to-September premium widened to a record near 7 cents/MMBtu, reflecting acute front-end tightness.

GRID

Heat Dome Tests Holiday Grids

A July 4 heat dome put more than 180 million people under heat warnings and kept PJM in a capacity emergency for a third straight day. Demand fell short of the expected record at ~162.4 GW as conservation took hold — the strain owing more to ~9.5 GW of unplanned outages than to load — and peak power eased ~40% to near $739/MWh Friday.

LNG

Qatar Pushes Export Restart

Qatar continues to push for a rapid restart, with an LNG tanker tracked through the Strait of Hormuz Thursday for the first time in about a week. A tanker attack gave reason for pause, but output at Ras Laffan is expected to continue.

U.S. LNG

Global LNG Rebounds, U.S. Feedgas Recovers

On the rebound in Qatari loadings, June global LNG exports recovered to their highest level since March. U.S. exports contributed too, with feedgas climbing to a three-month high near 17.4 Bcf/d.

Danielle Kenny