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Daily briefNarciso Cano

Crude Advances on Escalating Iran Tensions; Natural Gas Anchored Near $3/MMBtu

Crude gains as Iran tensions escalate

  • The WTI prompt-month contract climbed $1.37 to $65.33/Bbl in early Wednesday trading (7:30 AM CT)
  • Reports indicated the US may move to seize tankers carrying Iranian crude, alongside discussion of deploying an additional carrier strike group to the region if nuclear negotiations break down
  • Although last week’s initial US–Iran talks were described as constructive, the risk of failed diplomacy continues to support prices amid concern over potential military action and resulting supply disruptions
  • The American Petroleum Institute estimated a 13.4 MMBbl build in US crude inventories last week
    • Official government inventory data is scheduled for release later Wednesday

EIA signals softer price outlook

  • The agency expects global oil supply to outpace demand in the coming years, projecting average WTI prices to decline from about $65/Bbl in 2025 to $53/Bbl in 2026 and $49/Bbl in 2027
  • Ongoing implied global inventory builds in the near term are expected to weigh on crude prices even as geopolitical risks remain elevated

March Henry Hub contract remains around $3.10/MMbtu

  • The prompt natural gas contract is down slightly this morning, with prices remaining around $3.10/MMbtu for another day
  • Lower-48 population-weighted weather forecasts show temperatures above the ten-year average for the next week, before falling below average
  • Dry gas production recovered to 108.4 Bcf/d yesterday, but is lower at 107.5 Bcf/d today, according to S&P data

Trump unveils plant to support coal power plants (Bloomberg)

  • The Trump administration will use the 1950 Defense Production Act to enter into agreements to buy electricity from coal plants to power military facilities
  • The DOE will distribute $175 million to fund upgrades at six US coal power plants
  • This comes amid a broader push by the administration to extend the life of the US coal fleet, despite continued retirements and reduced utilization of coal plants by the power industry
  • Data from the EIA shows about 41 GW of planned coal plant retirements over the next decade, although many of those plants run well-below their maximum generation capacity

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