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Weather Swings Drive Gas Higher; Middle East Risk Keeps Crude Firm

Crude steady as Iran risk remains in focus

  • The WTI prompt-month contract slipped $0.07 to $65.35/Bbl on Friday morning (7:30 AM CT)
  • Iran signaled openness to negotiations if US military threats subside
    • “Provided that it is fair and equitable, the Islamic Republic of Iran is ready to participate in these talks,” Foreign Minister Abbas Araghchi said, while reiterating that Iran would not negotiate its missile program
  • Markets remain focused on whether an escalation could disrupt Iranian crude exports or shipping through the Strait of Hormuz
  • Citigroup estimates the Iran-related geopolitical risk premium at roughly $7–10/Bbl for Brent
    • The bank noted that near-term escalation remains possible, with the US likely to pursue actions calibrated to avoid triggering a disproportionate Iranian response

US expands Venezuela licenses (Bloomberg)

  • The Trump administration issued a general license broadening the ability of oil companies to operate in Venezuela, including exporting, selling, storing, and refining crude
  • The license allows US entities to engage with Petroleos de Venezuela SA but retains restrictions, including limits on transactions involving Chinese-linked entities

Natural gas prompt month contract gains 14c Friday morning to $4.061/MMBtu

  • Weather forecast volatility remains high, as models shifted materially colder in the Northeast and the Midwest in the 6-10 day period
  • Lower 48 temperatures in this period have shifted to around 9°F lower than the 10-YR average in the 6-10 day period
  • Lingering cold in the Northeast will continue to cause higher than average residential, commerial, and power demand
    • The weather swing colder added 40 Bcf in demand across the next two-week period
  • South Central dry gas production added 1.1 Bcf in the late-cycle, as post-freeze recovery close to normalizes before another freeze this weekend

LNG feedgas revised lower, as another unplanned Freeport outage pull final nominations down

  • Freeport LNG experienced an unplanned outage yesterday due to a compressor system failure, the event lasted 7 hours from 8:58AM CT
  • Despite being revised lower, feedgas is still in a slight net gain of 202 MMcf/d with gains across the Gulf Coast fleet, Corpus, and Plaquemines work to offset the -501 MMcf/d loss dod in the Sabine Pass
  • Total US feedgas demand has climbed back to 18.7 Bcf/d, with operations expected to normalize next week (Criterion)

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