Energy Market Update: July 2026

The Shipley Energy Commercial Solutions Team is excited to share the July Energy Market Update to inform you of trends, weather, and other factors impacting the energy market.

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Natural Gas Market Update

• July 2026 NYMEX expired at $3.231/MMBtu.
• A dangerous, record-challenging heat wave settled over the Central and Eastern U.S. in the final days of June, with forecasters flagging an elevated risk of extreme heat across the Great Lakes, Ohio Valley, Appalachians, and Mid-Atlantic into the second week of July. Natural gas demand has shifted from moderate to high as the eastern two-thirds of the country turns hot, with highs running into the 80s and 90s across the Northeast and triple digits farther west. For a market that spent the spring comfortably supplied, this is the first real test of summer cooling demand.
• The timing is notable. Working gas in storage stood at 2,835 Bcf as of the week ending June 19 which is still a healthy 152 Bcf above the five-year average, but for the first time this season, 49 Bcf below year-ago levels. Storage had been running above last year’s pace for most of the spring; that cushion has now narrowed to a deficit, even though the broader five-year surplus remains intact. It is a reminder that a wide surplus against history does not mean the market is immune to a real demand event. It simply means there is more room to absorb one.
• For Shipley’s customers in Pennsylvania, Ohio, and Maryland, the near-term picture remains manageable. The Appalachian basis at Tetco M3 and TCO Pool has stayed relatively calm through the spring even as national seasonal strips softened, and regional production continues to run near record levels. But EIA’s June Short-Term Energy Outlook now expects summer cooling demand to climb 2.3% over last summer, averaging 76.7 Bcf/d across June through August, and projects the Henry Hub averaging $3.34/MMBtu in the second half of 2026, up from earlier forecasts. The current heat wave is an early signal of how that demand growth could show up in real time.

Factors impacting the natural gas markets currently:

• Injection season (May–October) continues, but summer cooling demand is now the primary swing factor on storage builds. A hotter-than-normal summer, like the current heat wave suggests, would slow injections and could narrow the storage surplus further; a return to more seasonal conditions would allow the cushion to rebuild.
• Storage has flipped from a year-over-year surplus to a modest year-over-year deficit for the first time this season, even as the five-year average comparison remains strongly positive. This is worth watching over the next several storage reports to see whether it is a one-week blip or the start of a trend.
• The Strait of Hormuz situation remains unresolved, with a tentative U.S.-Iran agreement to reopen the waterway repeatedly breaking down through June. While this has not meaningfully moved domestic prices so far, it remains a standing source of volatility in global LNG markets that could spill over if conditions deteriorate further.

Action Advice:

With summer cooling demand now testing the market’s storage cushion in real time, we recommend checking in with your Account Manager to review your current coverage and confirm it reflects your risk tolerance heading into the heart of summer. Other rate options include Basis Only or NYMEX Lock deals to separate the two elements of your natural gas supply price to look for potential value vs standard Fixed pricing. For those who want to float their NYMEX, consider a cap and floor structure to economically manage your risk. Ask your Account Manager for details.

July 2026 Natural Gas NYMEX Settlement Price: $3.231/MMBtu
Last month: June 2026 Natural Gas NYMEX Settlement Price: $3.040/MMBtu
Last year: July 2025 Natural Gas NYMEX Settlement Price: $3.261/MMBtu

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Petroleum & Refined Products

Key Takeaways:

• Crude shed its entire war premium in June, with WTI falling from near $90 to the low-$70s as the Strait of Hormuz reopened following a U.S.-Iran peace framework.
• The drop marked roughly a 30% quarterly decline for Brent, the steepest quarterly fall since 2020.
• Despite crude’s collapse, PADD 1 distillate stayed structurally tight, with East Coast refinery utilization crashing to 76.5% and stocks running well below the 5-year average.
• A fire at Monroe Energy’s Trainer, PA refinery, combined with multiple Northeast terminal outages, further squeezed regional diesel and heating oil supply.
• Diesel cracks and cash differentials held firm even as the flat price fell, and this signals a strong opportunity to lock in fall/winter distillate coverage below spring levels.

The Month the War Premium Broke: Crude Sheds ~30% as the Strait of Hormuz Reopens, but Distillate Stays Tight

June opened with the 2026 Iran war and the closure of the Strait of Hormuz still setting the tone: Brent near $96-$97 and WTI near $90 to start (June 1: WTI ~$89.69, Brent ~$96.42), a bounce off May’s worst month since COVID (WTI -15.7%). Balances were extraordinarily tight: EIA showed a seventh straight weekly crude draw, down 8.0 MMbbl to 433.7 MMbbl (week ended May 29) and about double expectations, with Cushing near 23 MMbbl, and the IEA calling the market “severely undersupplied.” The war premium was fully priced in.

Then the geopolitics flipped. Trump called off threatened strikes on Iran (June 12), announced a framework to reopen Hormuz (June 15), and by June 17 an interim U.S.-Iran peace deal was set for signing in Switzerland, with Iranian exports to resume. WTI broke to a three-month low of $80.75 on June 16 and kept falling, down roughly 40% from the wartime peak by mid-month. National retail gasoline slipped below $4/gal for the first time in months (June 18’s $3.9987, a 28th straight daily decline).

The unwind accelerated into quarter-end. As tankers resumed Hormuz transit, WTI slid to ~$72-$73 by June 24; on June 25 Brent’s prompt spread flipped into contango for the first time since the war (WTI ~$69-$70). By June 30 WTI settled near $70.63 and Brent near $72.93, a ~30% Q2 drop for Brent and the steepest quarterly fall since 2020, as talks reconvened in Doha.

Through all of it, distillate was the standout strength, and the story that matters most for our book. PADD 1 never loosened: early-June East Coast stocks sat ~12 MMbbl (about 11-13%) below the 5-year average, and by late June regional refinery utilization had crashed to 76.5% (from 87.1%) with East Coast distillate down to 21.4 MMbbl. NYH ULSD held a premium to NYMEX even as the screen collapsed (barge/Buckeye +0.75¢ to +6.5¢; Colonial +5.25¢), diesel cracks stayed historically wide, and net distillate exports ran ~1.5 mb/d (+27% YoY): tight supply into firm demand, even as crude fell apart.

The Northeast supply stack did the rest of the work. A fire took down Monroe Energy’s 208,000 b/d Trainer, PA refinery late in the month (crude units restarting, FCC/alky offline ~4 weeks), and terminal outages piled up: Baltimore CITGO ULSD unavailable, Buckeye’s Laurel/Sinking Spring out of ULSD for about a week and a half, Rochester diesel maxed more than once, and Marcus Hook propane rack outages. Volatility hasn’t fully left, either: two vessels were damaged over the final weekend, and the IEA still sees 2026 global supply down 3.9 mb/d on Gulf losses.

Price Technicals: WTI Crude

WTI retraced the entire war premium, from ~$90 to the high-$60s/low-$70s by quarter-end, with the decisive break at the $80.75 three-month low on June 16. The curve told the same story: WTI’s M1-M6 backwardation compressed from ~+$13.60/bbl in early June to +$5.80 by June 17, and the M1-M2 spread eased to a bare +$0.30 by June 30, the war-tightness signal essentially gone. Near term we see WTI rangebound in the high-$60s to low-$70s with a downside bias toward the mid-$60s if the deal holds; the risk is asymmetric: any Hormuz re-escalation can put $5-$10/bbl back in quickly.

Price Technicals: HO / ULSD

Heating oil was the relative winner and the cleanest read on physical tightness. Even as flat price fell, NYMEX HO held steep backwardation (M1-M2 +15.03¢/gal on June 30) and diesel cracks stayed historically wide on a 76.5% PADD 1 run rate. NYH barge/Buckeye ULSD held premiums all month (+0.75¢ to +6.5¢), with Colonial ~+5.25¢ and Linden +5.00¢, diffs firm while the outright fell. We expect prompt strength to persist: low stocks, ~27% YoY export pull, and the Trainer outage keep the front bid; watch the Trainer restart and Sinking Spring resupply for whether Northeast diffs hold or normalize into July.

Price Technicals: RBOB Gasoline

Gasoline softened with crude: NYH RBOB cash eased to ~$2.87-$3.06 by late June and retail broke below $4/gal, but it’s not loose. Early-June stocks were thin (211.6 MMbbl, the lowest May reading since 2014) and the RBOB curve stayed backwardated (M1-M2 +14.52¢/gal on June 30). Constructive-but-capped: summer demand and lean stocks provide a floor while the crude overhang limits the ceiling; absent a fresh Hormuz scare, the outright likely tracks WTI sideways-to-lower into July.

Bottom Line

Bottom line: the war premium that defined Q2 has largely deflated. Crude is now supply-led lower as Hormuz reopens, but PADD 1 distillate remains the tight spot, with cracks and cash diffs firm against a falling screen and the Trainer outage keeping the Northeast structurally short. Expect prompt distillate strength to persist; watch the Trainer restart, the Sinking Spring resupply, and any renewed Hormuz disruption.

Action Advice:

Our focus stays on the back end of the HO NYMEX curve; if physical tightness holds, we expect it to “roll up.” With flat price reset ~30% off the wartime highs to ~$70 WTI, this is an opportunity to layer in fall/winter distillate coverage well below spring levels. Review your fall/winter needs with your account manager and keep a close eye on the winter strip.

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Electricity Market Update