Oil Steady Ahead of US-Iran Talks; Gas Rebounds as Warm Shift Caps Demand

Crude steady ahead of US-Iran talks

• The WTI prompt-month contract climbed $0.52 to $66.15/Bbl on Wednesday morning (7:30 AM CT)
• The next round of nuclear negotiations between the US and Iran is scheduled for Thursday in Geneva
• • The talks come just ahead of this weekend’s OPEC+ meeting, where delegates indicate the group is likely to approve incremental supply increases
  • OPEC+ has held output targets unchanged through the first quarter of 2026
• President Trump said in his State of the Union address that Iran is attempting to rebuild elements of its nuclear program, fueling speculation that military options remain under consideration
• Crude prices have reacted sharply to geopolitical headlines this year, rallying even as consensus expectations point to growing global supply
• • That uncertainty is increasingly evident in the options market, where front-end contracts are skewed toward upside calls (see our latest piece on positive call skew)
• In the event of escalation, Iran could respond by threatening traffic through the Strait of Hormuz, a chokepoint that carries roughly one-quarter of global seaborne crude flows

March natural gas rebounds slightly, up 6.3c to $2.978/MMBtu (As of 07:30 AM CDT)

• A short-lived cold front is still on the radar for early next week, but the forecast period after that has warmed this morning
• • L48 temperatures in early-middle March have shifted from normal to above average, sitting around 5 °F above the 10-Year average
• Production remains slightly below the 110 Bcf/d level from last week, sitting at 107.2 Bcf/d, as weather shuts in minimal production in the Rockies and Appalachia (S&P)
• Total L48 gas demand is down 14 Bcf/d to 134 Bcf/d this morning as temperatures warm after the brief cold spell
• LNG feedgas demand is at 19.6 Bcf/d, at the lower end of the recent range (Criterion)
• • Forecasts for next week sit at 20.4 Bcf/d, suggesting a quick recovery supported by ongoing commissioning at Corpus Christi Stage 3

HSC at wide discount to Katy hub amid Weak Texas demand (S&P)

• The Katy premium to HSC has averaged 46c/MMbtu over the course of February
• HSC is heavily influenced by local consumption, which has been weak this month