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Oil Rebounds as Traders Monitor Middle East Risk; Gas Struggles Despite Colder Forecasts

Oil bounces back after mid-week pullback

  • The WTI prompt-month contract rose $0.66 to $59.85/Bbl on Friday morning (7:45 AM CT)
  • Crude futures are higher as traders weigh renewed tensions in the Middle East
  • The New York Times reported that Israel’s Prime Minister Benjamin Netanyahu asked President Trump to delay plans for a potential strike on Iran
    • This reduces the near-term likelihood of a US response to violent protests in Iran, which could have threatened production or shipping flows
  • However, the US is increasing its military presence in the region, according to Fox News
  • Despite recent volatility, crude is on track to end the week with a small gain after last week’s rally on fears of a US-Iran confrontation

Harold Hamm to pause Bakken drilling (Bloomberg)

  • Continental Resources founder Harold Hamm is preparing to suspend drilling activity in North Dakota’s Bakken, marking a rare pullback after decades of continuous development
  • According to BloombergNEF data, most Bakken wells require roughly $58/Bbl to break even and produce a small return, leaving current prices too low to justify new drilling

Natural gas heads for another weekly loss

  • The February contract is currently down about 8c this week, although briefly traded as high as $3.50/MMbtu
  • Weather forecasts cooled again overnight, with Lower-48 population-weighted average temperatures forecast to remain below the ten-year average for the next two weeks
  • Dry gas production has fallen to new year-to-date low of 108 Bcf/d, according to data from S&P
  • LNG feedgas demand has recovered to more than 20 Bcf/d, after falling to 17.44 Bcf/d earlier this week

LNG continues to displace Russian gas in Europe (NGI)

  • Europe’s pipeline imports of Russian gas continued to fall last year, as volumes of US LNG increased
  • Data from Kpler showed LNG imports into Europe hit a new record in 2025, with 57% of cargoes coming from the US
  • The EU has made moves to permanently ban the import of Russian gas by 2027, which should support continued exports from the US to Europe
    • While Europe will seemingly remain reliant on LNG, most global demand growth is concentrated in Asia

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