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Crude Slides as Iran Risk Premium Unwinds; Warm Shift Pressures Gas

Crude slides as Iran risk premium unwinds

  • The WTI prompt-month contract dropped $3.34 to $61.87/Bbl by Monday morning (7:30 AM CT)
  • Prices fell sharply as markets backed out geopolitical risk after President Trump said the US is engaged in talks with Iran
    • Trump dismissed weekend rhetoric from Iran’s Supreme Leader Ayatollah Ali Khamenei, saying he remains optimistic a deal can be reached
    • Iran’s foreign ministry echoed a more conciliatory tone, with state-affiliated media indicating discussions between Washington and Tehran could take place in the coming days
  • With no immediate supply disruption emerging, crude is giving back previously priced-in risk as the market recalibrates following last week’s escalation fears

OPEC+ maintains supply pause (Bloomberg)

  • OPEC+ confirmed it will hold output steady in March, extending the final month of its three-month supply freeze despite prices recently reaching four-month highs
  • The group deferred decisions on post-Q1 production policy to its next meeting on March 1

Natural gas prompt month price is down 79c this morning to $3.566/MMBtu (7:42 AM CT)

  • Weather models moved significantly warmer, erasing 97.3 Bcf of demand over the next two weeks compared to the Friday model (Criterion)
  • Lower 48 temperatures have risen 29.8°F over the weekend, one of the largest swing on record
  • While we will see cold sustained through this week, the mid-month temperature pattern is now looking in line with the 10-YR average
  • Gas production is back at 109.5 Bcf/d, adding 1.8 Bcf/d, spurred on by gains in Early Cycle nominations in the South Central region
    • Lower 48 gas output stands 6 Bcf/d higher than last weeks average
    • Appalachian gas production is still depressed at 34 Bcf/d, as temps fall below -10 °F

LNG feedgas noms open this morning at 18.9 Bcf/d, returning towards the 19.5-20 Bcf/d levels

  • LNG feedgas demand continues to lag in the northeast and east coast regions
    • Elba facility is still only pulling 15 MMcf/d
    • Plaquemines is still running 500 MMcf/d below its two week week high, at 3.8 Bcf/d (Criterion)
  • Further flows are from Corpus Stage 3 Train 5 and Golden Pass LNG Train 1 in March are expected to account for a rising feedgas demand over the next week, and month

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