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Oil Slides Toward Weekly Loss Amid Diplomacy; LNG Recovery Supports Gas Prices

Crude whips as US-Iran talks begin

  • The WTI prompt-month contract edged up $0.03 to $63.32/Bbl on Friday morning (7:30 AM CT), trading in sharp swings as headlines around the Oman meeting drove volatility
  • Iranian officials described the talks as an initial diplomatic step aimed at “managing the current situation”
  • Even with the geopolitical risk premium supporting prices, crude remains on track for its first weekly decline since December
  • Separately, trilateral discussions involving the US, Ukraine, and Russia produced the first prisoner exchange in five months, a potential signal of incremental progress toward ending the four-year conflict

Saudi lowers official selling price (Bloomberg)

  • Saudi Arabia cut the Arab Light official selling price for Asian buyers by $0.30/Bbl to parity with the regional benchmark, pushing the differential to the lowest level in years and signaling that global supply is running ahead of demand
  • The smaller-than-expected reduction suggests the kingdom still sees underlying demand resilience, helping ease concerns about a deeper near-term surplus

Natural gas prompt month is up 8c to $3.589/MMBtu (07:30 AM CT)

  • L48 supply took a -1.7 Bcf/d hit this morning due to a -1.0 Bcf/d loss in Canadian imports and a -0.7 Bcf/d hit to L48 production (Criterion)
    • CAD imports are sitting at 6.0 Bcf/d to bring the weekly average down to 7.8 Bcf/d, which is down 1.3 Bcf/d from last week
    • L48 production has a weekly average of 109.4 Bcf/d, which is up from an average of 102.9 Bcf/d last week
  • Weather forecasts have shifted slightly warmer today, with gains in the 1-5 day range, primarily in the Midwest, Northeast, Southeast, and South Central
    • These forecasted gains in the 1–5 day range work to more than offset losses in the 6-10 day range across most of the L48
  • L48 forecasted gas demand shed -6.2 Bcf this morning, which partially reverses yesterdays 10.4 Bcf gain

US LNG feedgas nominations slipped -55 MMcf/d this morning to 19.1 Bcf/d (Criterion)

  • LNG feedgas nominations recovered 3.18 Bcf/d this week to 19.16 Bcf/d as many L48 LNG facilities returning to normal operations
  • Elba LNG terminal ramped back up to full capacity this morning, working to offset losses across the gulf coast
  • In the upcoming weeks Corpus prepares to bring on Stage 3 Train 5, and Golden Pass is expected to start producing LNG in early March

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