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Oil Slips as Dollar Strengthens; Northeast Gas Output Climbs ~700 MMcf/d

Oil retreats as dollar strengthens
- The WTI prompt-month contract slipped $0.89 to $60.16/Bbl Tuesday morning (7:45 AM CT)
- The dollar climbed to its highest level since August after Federal Reserve officials delivered mixed signals on future interest rates, pressuring crude prices
  - “Asian and US manufacturing activity continues to contract, fueling concerns over demand headwinds,” an analyst at brokerage PVM noted, adding, “a strong dollar does not help either”
- Over the weekend, OPEC+ confirmed it will hold off on raising production quotas in 1Q26
  - The market anticipates a potential supply glut heading into the new year
Russia’s crude flows start to decline (Bloomberg)
- Russia’s seaborne crude shipments plunged by the most since January 2024 as new US sanctions prompted key buyers to avoid Moscow’s barrels
- Refiners in China, India, and Turkey are pausing purchases of sanctioned cargoes and seeking alternative sources, pushing Russian crude at sea to more than 380 MMBbls
- Gunvor CEO Torbjorn Tornqvist commented that Moscow has historically found ways to bypass sanctions and expects disrupted barrels will eventually find buyers

Regional Market Insights

Updated regularly with the most important market moves and outlooks.

Natural gas prices are steady after yesterday’s 14c rally
- The December Henry Hub contract is trading near $4.25/MMbtu, following a three-day rally which has sent prices higher by more than 40c
  - The Winter ‘25/’26 seasonal strip is at the highest level since July, while prices for Summer ’26 are also near multi-month highs
- Next week, Lower-48 gas demand should spike to the highest level since last winter amid significantly cooler temperatures in the Midwest and Northeast
Fermi secures approval for AI campus gas power plant (Bloomberg)
- Fermi Inc. has received preliminary approval to build 6 GW of natural gas generation, part of a plan to build 11 GW total
- The plant will power a datacenter project planned to be built near Amarillo
- Current plans call for 1 GW of capacity to be online by the end of 2026, with 11 GW total by 2038
Northeast gas production rebounds (S&P)
- Following shut-ins in Q3, dry gas output from the Northeast is up by about 700 MMcf/d since the first half of October
- The increase in production comes as space heating demand ramps up and regional cash prices strengthen
- EQT was one of the operators curtailing production, saying it would shut-in 15-20 Bcfe in October
- Northeast production has averaged about 35.5 Bcf/d over the past few weeks, still down from the 36.9 Bcf/d seen last May