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Oil Supported by Sanctions Talk; Gas Eyes Mexico Relief

Oil rises on Russian supply risks, market stays rangebound
- WTI prompt-month futures were up $0.20 to $62.89/Bbl early Monday (7:45 AM CT)
- President Trump renewed calls for Europe to halt purchases of Russian oil, warning he is prepared to impose “major” sanctions if NATO allies join
- Ukraine has intensified attacks on Russia’s oil infrastructure
  - Drones struck the Kinef refinery over the weekend, a facility with more than 20 million tons of annual crude-processing capacity
- “The Ukraine stalemate is the key factor in the oil market, with upside risk tied to further sanctions and strikes on Russian oil exports,” said Vandana Hari of Vanda Insights
- OPEC+ has begun unwinding a recently reintroduced tranche of output cuts earlier than planned, leading the IEA to forecast a record surplus in 2025
- Crude has been trapped in a sub-$5/Bbl range since early August as geopolitical risk premiums clash with bearish supply-demand fundamentals
Funds cut bullish bets to record low
- Hedge funds slashed net-long WTI positions by 14,630 contracts to just 12,657, the lowest level since data began in June, CFTC data show
- Net-long Brent positions also fell sharply, posting the largest weekly decline since June, according to ICE Futures Europe

Regional Market Insights

Updated regularly with the most important market moves and outlooks.

Natural gas is trading lower, extending losses from last week
- The October Henry Hub contract fell about 9c last week, falling below $3/MMbtu and reversing gains from the prior week
- Lower-48 population weighted temperatures, while forecast to be mostly above the ten-year average for the next two weeks, have begun to decline
More firms look to Permian to Mexico option amid weak prices (NGI)
- A lack of available pipeline space in West Texas has been an issue for gas prices in the region, especially during maintenance or outages
- More demand outlets in Mexico could help alleviate this problem, with Mexico’s largest private gas system planning to add significant capacity soon
- Works planned by Esentia Energy Systems could add as much as 1 Bcf/d of capacity to the Wahalajara system in Mexico
- In addition to more demand in Mexico, there is potentially 10 Bcf/d of pipelines being built from the Permian between now and 2030