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- Daily Energy Market Update July 7, 2026
Crude is trading higher this morning after reports that a commercial tanker was struck by a projectile while transiting the Strait of Hormuz off the coast of Oman. The incident has reintroduced a geopolitical risk premium into the market and serves as a reminder that the ceasefire between the U.S. and Iran remains fragile. While details surrounding the attack continue to emerge, the market is once again being forced to assess the potential for disruptions to one of the world's most critical energy shipping lanes.
Positioning appears increasingly skewed to the short side following the post-war selloff, leaving the market vulnerable to bouts of short covering on geopolitical headlines. Today's rally appears to reflect a repricing of geopolitical risk rather than a material change in the underlying supply-demand balance. The key question now is whether this proves to be an isolated incident or the beginning of renewed instability in the region.
Attention will also shift to this week's U.S. inventory data. Consensus expectations call for another decline in crude stocks, which would mark the eleventh consecutive weekly inventory draw. While the pace of the draws is expected to moderate, U.S. crude inventories remain below the five-year seasonal average, providing an underlying source of support for the market.
For now, the Strait of Hormuz remains the primary catalyst. If tensions escalate or commercial shipping becomes increasingly disrupted, the geopolitical premium could expand quickly. Conversely, if today's incident proves isolated, traders are likely to refocus on inventories, demand trends, and the technical picture. With headline risk elevated and positioning favoring the short side, volatility is likely to remain above normal in the near term.
Crude (Cont. Contract)
Crude is opening this morning up 0.81 at 72.29.
The technical focus remains the recent bullish reversal. Crude has filled the war gap and subsequently posted a bullish reversal while deeply oversold. Since printing that reversal bar, price has not made a new low and has rallied from the 70.14 reversal-bar low to a high of 73.31.
Momentum has also turned higher, with the stochastic crossover now pointing upward, although it remains in oversold territory. This suggests downside momentum is fading and a recovery phase may be underway.
Key Levels
Resistance
77.76 – 20-day moving average
78.95 – 200-day moving average
Support
70.14 – Reversal-bar low (watch for a close below this level)
65.14 – Lower Bollinger Band
Crude (Cont. Contract)
Heating Oil (HOQ6)
Heating oil is trading modestly lower this morning at 3.2937.
Yesterday marked the first close above the 20-day moving average in more than three weeks. Overnight, prices rallied to a high of 3.3421 before reversing and trading back below yesterday's settlement. So far, today's range has been less than half of the average daily range, suggesting relatively quiet price action.
Momentum has moved into neutral territory while continuing to point higher. It will be important to monitor how momentum responds if prices pull back toward support at the 20-day moving average. Holding that level would help reinforce the recent improvement in the technical outlook.
Key Levels
Resistance
3.4849 – 50-day moving average
3.5770 – Upper Bollinger Band
Support
3.2549 – 20-day moving average
3.0013 – June 18 low (lowest low since the May high)
Heating Oil (HOQ6)
Crude Spread (CLZ6/CLZ7)
The spread is opening 0.32 higher this morning at 1.96.
So far, the spread is trading inside yesterday's range while also posting a second consecutive higher low as it attempts to build momentum off the July 2 low of 1.38. Although price action has stabilized, the next key test will be whether it can extend the recovery through nearby resistance.
Momentum is attempting to cross higher from deeply oversold territory, suggesting downside pressure may be easing. The key level to watch on the upside is the 200-day moving average at 2.28. A sustained move above that level would strengthen the case for a broader recovery.
Key Levels
Resistance
2.28 – 200-day moving average
3.81 – 20-day moving average
Support
1.38 – July 2 low
0.12 – Lower Bollinger Band
Crude Spread (CLZ6/CLZ7)
Natural Gas Market Overview
Natural Gas (NGQ6)
Natural gas is up 0.035 in overnight trading, currently trading at 3.280.
Yesterday marked the ninth session out of the last 13 in which natural gas traded down to the 50-day moving average but held that level on a closing basis and rebounded. While the 50-day moving average (3.187) has provided strong technical support, prices have been unable to break out of the two-month trading range.
Momentum remains neutral and is essentially flat, showing little indication of a directional bias. In the current environment, natural gas appears content to remain range-bound until a catalyst emerges.
Key Levels
Resistance
3.321 – Upper Bollinger Band
3.377 – Double top from late June
3.417 – Double top from early June
Support
3.223 – 20-day moving average
3.187 – 50-day moving average
3.128 – Lower Bollinger Band
Natural Gas (NGQ26)
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Disclaimer
This article and its contents are provided for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any commodity, futures contract, option contract, or other transaction. Although any statements of fact have been obtained from and are based on sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed.
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