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Daily briefNarciso Cano

Crude Eases as US-Iran Talks Progress; Gas Drops on Warmer Spring Shift

Oil drifts lower as US–Iran negotiations continue

  • The WTI prompt-month contract declined $1.21 to $64.21/Bbl as of 7:30 AM CT Thursday, pulling back from recent highs as traders pared geopolitical risk
  • The US and Iran are engaged in a third round of nuclear negotiations in Geneva, with Oman’s foreign minister describing the latest exchanges as “constructive” and said new proposals were put forward by both sides
    • Negotiators paused for consultations and are expected to reconvene later today, underscoring that talks remain active but unresolved
  • Analysts at Goldman Sachs estimate that roughly $5–$6/Bbl of geopolitical premium tied to potential US military action against Iran is already embedded in current prices

OPEC+ delegates signal possible output increase (Bloomberg)

  • Several OPEC+ delegates indicated the group is likely to move forward with a gradual return of curtailed barrels when it convenes this weekend to assess April production policy
  • Discussions have centered on a potential 137 MBbl/d increase, consistent with the incremental adjustments implemented late last year
  • Any decision to add supply would come against a backdrop of rising non-OPEC production growth, reinforcing concerns about looser balances

Natural gas slides -7.7c to $2.791/MMBtu on contract roll (As of 07:30 AM CT)

  • March contract futures settled yesterday, and today is the first day of April prompt month trading
  • Weather forecasts shifted significantly warmer today across the L48 as we begin to see spring weather
    • There was significant warming in the Northeast and Midwest forecasts, with an added total of approximately 83 °F across the forecast period from yesterday in these regions (Criterion)
    • By late next week temperatures should transition to an above normal pattern
  • Production held near 107.7 Bcf/d this morning, but lingering freeze off issues in the Appalachia subside over the weekend
  • The EIA will release its weekly natural gas storage report this morning, with a median expectation of a -50 Bcf withdrawal, according to the Bloomberg survey
    • The five-year average withdrawal for the corresponding week is -168 Bcf

Oneok and partners secure long-term contracts for Eiger Express Permian gas Pipeline (S&P)

  • The 3.7 Bcf/d Permian Basin to Katy Hub natural gas pipeline is now under long-term contracts, according to a company executive
  • The pipeline is now 100% contracted for a minimum of 10 years
    • Oneok expects Permian production to grow 1 Bcf/d per year, and have contracted some capacity on Eigar to provide an outlet for it's Permian customer's gas

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