AEGIS projects storage to enter Winter '26/'27 withdrawal season at 3.83 Tcf
It's interesting to note the continued slide of forward-looking prices in the face of a reducing storage surplus to the five-year average
Structural demand increases over the next six months will come from the rest of Golden Pass train 1 and the eventual startup of Golden Pass train 2
NextDecade's Rio Grande LNG is now expected to start taking gas much sooner than previously announced
This could pull forward demand that wasn't expected until late 2027
However, the Permian Basin has started to receive pipeline commissioning's earlier than expected
The full 4.5 Bcf/d of extra egress is still expected to be available by early 2027
The availability of Permian gas is expected to keep the gas market well supplied through the first half of 2027
Meteorological forecasts are continuing to indicate this El Niño pattern to be the strongest on record
Strong El Niño years typically result in a warmer than normal winter across the lower 48
Strategy
Our view is neutral assuming normal weather, however, if you assume the El Niño pattern has validity, then one could be bearish versus the curve (9/4/26)
If producers have volume left to hedge, we recommend collars to capture some upside via the call skew
As flat price for winter has moved down, call skew has increased. A weather pattern that runs counter to El Niño expectations could therefore provide a bullish catalyst
Summer 2027 - Bearish
Fundamentals
The summer 2027 set up will of course be dependent on how Winter 2026/27 unfolds
If winter 2026/27 materializes lower than current price, summer 2027 will be dragged down with it
We have a higher conviction that the likelihood of a warm winter is greater than a normal to cold winter
The second half of 2027 starts to look structurally more bullish when new LNG demand is set to come online
Strategy
Price has finally fallen below $3.00 (as of 9/29), we recommend swaps or tight collars to protect against further weakness
Crude (WTI)
Bal 26 - Bullish
Fundamentals
We agree with many other analysts that the Strait will continue to be disrupted at least through year end
Vessel traffic through the Strait of Hormuz has continued to be restricted
Reports, from various analysts, are that oil exports are back near pre-war levels while product flows remain limited
Price action remains very volatile due to mixed messaging and a lack of follow through with regards to negotiations between the US and Iran
This reality makes it difficult to predict near term fundamentals
The duration of the conflict and subsequent restriction of vessel traffic through the Strait could cause prices to further escalate if the global supply cushion is depleted
On the flip side, a 'normalization' would put pressure on prices
However, because of the length of the global disruption price outcomes moving forward are skewed to the upside
Strategy
We still favor upside friendly structures like costless collars
Swaps will provide greater price protection for those who find current put strikes of a collar unattractive
Cal 27 - Neutral
Fundamentals
Fundamentals for 2027 still look quite bearish
Almost all analysts predict above 3 MMBbl/d of oversupply in 2027
However, 2027 is very path dependent on the conflict in 2026
If the Strait of Hormuz' vessel traffic remains constrained into the start of 2027, the estimated global oversupply would be dampened
However, just like 2026 a 'normalization' would lead to lower prices
In its latest Short-Term Energy Outlook (STEO) the EIA has risen its 2027 price target to about $80.00
The EIA still expects a large daily oversupply during 2027 but notes the following:
A possible bid in inventories due to restocking
Continual geopolitical risk premium throughout the EIA price horizon (through YE27)
Strategy
With Cal 27 WTI pricing over $80/Bbl (10/8/26), add protection with collars to establish downside protection while retaining some upside exposure
Get market insights delivered to your Inbox every day!
