July Pricing Analysis - North American Crude

July inverted June. The war premium finished draining in the first four sessions, then rebuilt in steps as the ceasefire fractured, Iranian attacks on Gulf and third-flag commercial shipping resumed, and a naval blockade of Iran's coastline came back into force from 14 July. WTI (DSW) Cushing Cash ran from a 68.58 open to a 94.22 high on 23 July, broke over two sessions on 27 and 28 July, and closed 84.67; the monthly average of 79.44 still sits 3.01% below June because June opened with the premium intact and bled all month, so the average fell while the month rose. The North American read is not the flat price. It is that value shifted toward the coast: WTI East Houston gained on both WTI Midland and WTI ex Basin, printed at or above ex Basin on 3 of 22 sessions against none in June, and month-end backwardation ordered itself by proximity to the coast. That leans toward export demand improving without settling it. Sour grades gave back the most, Mars losing its premium to the Cushing benchmark entirely, while Cushing stocks of 18.599 million barrels in the week to 24 July sat below the 20 million barrel operational minimum, leaving the front with no cushion.

MARKET ACTIVITY

• Published spot volumes rose into the rally, led by SGC.
• SGC traded volume averaged 12,000 bbl per session (+23.37% MoM), Mars 18,773 bbl (+2.13%) and Poseidon Houma 2,089 bbl (+8.12%); volume rising in the grades that lost the most ground on differentials is consistent with length being moved rather than accumulated.

PRICE ACTION

• Cushing Cash rallied 23.5% open to close yet averaged 3.01% below June, the arithmetic of a premium that bled out before it rebuilt.
• WTI (DSW) Cushing Cash opened 68.58, closed 84.67, averaged 79.44 against June's 81.90 (-3.01% MoM, +17.87% YoY against Jul-25's 67.39); high 94.22 (23 Jul), low 68.55 (6 Jul), range 25.67.
• The first four sessions went nowhere, 68.58 to 68.55, then the market stepped higher on discrete headline dates rather than drifting. Anyone reading the monthly average alone will misread the direction of travel.
• Largest single session -8.43 on 27 Jul, and the break ran two days, not one, before the close recovered to within 9.55 of the high.

CROSS-MARKET DYNAMICS

• East Houston gained on both the origin and the hub, and closed above ex Basin for the first time since May.
• The triangle answers June's open question. Ex Basin, Midland-quality crude at Cushing, held +0.5836 over WTI Midland against June's +0.7248, so the hub premium compressed; East Houston widened to +0.2682 over WTI Midland from +0.1495; East Houston against ex Basin improved from -0.5752 to -0.3155 and printed +0.05 on 31 Jul, at or above ex Basin on 3 of 22 sessions against zero in June. Same-quality barrels worth more at the coast than at the hub points toward export demand improving, though East Houston only partly speaks to it and does not settle the question on its own.
• Note what this does not say: WTI Midland against Cushing Cash averaged +0.2045 against June's +0.2000, and a Midland premium on its own says nothing about exports. East Houston against WTI Midland is the better read of the two, without being conclusive.
• Sour gave back the most, Mars against Cushing Cash swinging from +1.1738 to -0.9545 and East Houston against Mars flipping from -0.8243 to +1.4273, but part of that is the sours carrying more of June's premium: SGC opened 1 July in prompt contango at -1.41 M1-M2 against Cushing Cash at +0.07, already in surplus on day one.
• LLS traded below HLS on 8 of 22 sessions, low -1.88 on 21 Jul, against a June average of +0.6652; with the ULSD crack against Dated Brent expanding 38% on the month, the heavier and more distillate-rich sweet cut was worth paying for.

CROSS-REGIONAL DYNAMICS

• Canadian sour widened at both hubs while the leg between them held.
• The Canadian Sour Cushing diff widened from -4.2619 to -6.5477 and Canadian Sour Houston from -3.4571 to -5.7068, the heavy discount deepening as the light sweet deliverable barrel took the bid.
• Canadian Sour Cushing against Houston was near unchanged at -0.8409 against -0.8048, so the widening is quality and destination rather than the pipeline leg; WCS Hardisty averaged 62.69, -5.59% MoM.

CURVE STRUCTURE

• Bull steepening, and backwardation steepened with proximity to water.
• Bull steepening: M1 rose 16.09 against M12's 3.48, the front gaining 4.6x the back. June closed with M1-M12 near +3, so July reversed the compression and multiplied it.
• M2-M12 at the last July print orders itself by distance to the coast: East Houston +11.92, ex Basin +11.39, Mars and Cushing Cash +11.22, SGC +10.98, WTI Midland +10.52, Canadian Sour Cushing +9.32, Canadian Sour Houston +9.29. The origin is flattest and the coastal grades steepest, which leans toward demand sitting closer to water than to the hub.
• Cushing at 18.599 million barrels is below the 20 million barrel operational minimum, which explains why the front had no cushion. It does not explain the move: June also ran under 25 million barrels while backwardation compressed.

PRICE VOLATILITY

• Dispersion eased from June's high but stayed well above the spring baseline.
• Cushing Cash CV eased to 9.30 from June's 11.33 while the market covered a 25.67 range, so July's dispersion is trend, not chop.
• Mars at 12.03 again ran hotter than the benchmark, the sour barrel still doing the most repricing. Anyone calibrating risk off spring levels near 6 is under-hedged.

SOMETHING TO WATCH

• East Houston against ex Basin, the spread June flagged, now turning:
  • Observation: improved from -0.5752 to -0.3155 and closed +0.05, at or above ex Basin on 3 of 22 sessions against none in June; July high only +0.18.
  • Why it matters: a sustained coastal premium is what finances moving barrels to water. Three sessions and a month-end print are a turn, not a confirmation, and this spread only partly speaks to export demand.
  • What to monitor: daily East Houston against ex Basin; weekly EIA crude export figures.
• The M2-M12 ordering by location:
  • Observation: the coastal grades are steepest at +11.92 and the origin flattest at +10.52.
  • Why it matters: while that ordering holds, the marginal value is being set nearer the coast than the hub; if Midland steepens through East Houston, that has reversed.
  • What to monitor: month-end M2-M12 by grade; East Houston against WTI Midland.
• Cushing against its operational minimum:
  • Observation: 18.599 million barrels in the week to 24 July, below the 20 million barrel operational minimum and 17.5% under the year-ago week (EIA).
  • Why it matters: below operational minimum the front has no buffer at all, so a supply headline transmits straight into M1-M2 rather than being absorbed by stock.
  • What to monitor: EIA Wednesday Cushing stocks; M1-M2 on the Cushing Cash curve.