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First Look - Oil trades higher by more than $1/Bbl, as markets anticipate a potential Israeli response

Oil is trading higher by more than $1/Bbl, as markets anticipate a potential Israeli response
- Concerns that Israel could strike Iranian oil infrastructure have led to higher geopolitical risk premium in crude markets
- The options market continues to retain a bullish bias, with Brent implied volatility near the highest level in almost a year
- China will discuss additional stimulus packages in a press briefing on Tuesday, with expectations for expanded public spending
Goldman Sachs sees higher Brent prices on escalating Iran tensions (PGJ)
- Goldman Sachs predicts Brent prices to rise in 2025 due to potential Iranian supply disruptions amid heightened Middle East tensions
- Israel pledges to strike Iran after missile attacks following the assassination of a Hezbollah leader
- Brent could rise to $90 if a two million barrels per day disruption is not offset by OPEC, potentially mid-$90s in 2025 with no OPEC intervention
- Brent is expected to trade in the $70-85 range, averaging $77 in Q4 2024 and $76 in 2025 without major disruption

Gas trades lower with Hurricane Milton in focus
- Prompt gas was 4.3c lower to $2.811/MMBtu (As of 8:15 AM)
- Winter ‘24/’25 strip is up 0.6c to $3.266, and the Summer ’25 strip is up 1.5c to $3.275
- Milton intensified into a category four hurricane on Monday, risking renewed power sector gas burn losses across Florida
- Today's weather turned colder in the Midwest, Northeast, and Southeast, while the South Central and Rockies warmed, but overall temperatures remain near 10-year averages despite a shift from last week's pattern (Criterion)
ERCOT sees 60% rise in large flexible load by 2025 amid data center growth (Criterion, EIA)
- ERCOT's large flexible load (LFL) is expected to rise to 54 billion kWh in 2025, a 60% increase from 2024, driven by data center and AI demand growth
- This projected increase would account for 10% of the total forecast electricity consumption on the ERCOT grid in 2025
- LFL customers, with a peak demand capacity of 75 MW, have entered curtailment agreements to reduce consumption during peak periods, alleviating some impact from rapid growth
- Additionally, LFL customers typically use about 65% of their total approved capacity, according to the EIA’s analysis of ERCOT data