Crude Rises as Strikes on Energy Infrastructure Escalate; Gas Inches Higher Despite Warming Forecasts

Attacks on energy infrastructure lifts crude

• The WTI prompt-month contract rose $1.87 to $96.24/bbl on Wednesday morning (7:56 AM CT)
• Crude advances as Iranian energy assets are hit and Gulf supply remains constrained
• Iran reported strikes on key energy infrastructure including portions of the South Pars gas field and facilities in Asaluyeh, raising concerns over additional supply disruptions
• Flows across the Persian Gulf remain severely restricted with transit through the Strait of Hormuz effectively halted and only limited volumes able to move through alternative routes
• Iraqi exports via the Kurdistan to Ceyhan pipeline are expected to resume but volumes represent only a fraction of pre-conflict output
• The disruption has pushed deferred curves higher with Cal 2027 above $70/bbl while physical shortages develop in parts of Asia
• Elevated fuel prices are beginning to feed into broader macro concerns with US diesel prices exceeding $5/gallon, increasing pressure on inflation and central bank policy
• The API reported a 6.6 MMbbl build in US crude inventories last week with official government data due later today

Natural gas prompt month is up 6.0c to $3.083/MMBtu. (As of 07:30 AM CT)

• Weather-driven demand fell significantly today as the cold front subsides (Criterion)
• • Production fell a further 0.5 Bcf/d today to a new two week low at 108.5 Bcf/d
  • • This is nearly 3 Bcf/d below the March 6 high of 111.5 Bcf/d
    • Recovery is expected over the weekend as pipe outages and weather driven demand fade
  • Forecasted Power and Rescom demand both fell as weather forecasts warmed across the L48

FERC poised for decision on Texas gas storage plant and pipeline authorizations (S&P)

• FERC has an open meeting on March 19 where they will vote on Golden Triangle Storage’s Spindletop 30.8 Bcf Expansion Project
• • This project is expected to add four new salt dome caverns to a facility in Jefferson County, Texas
  • The expansion is expected to help meet demand from Gulf Coast LNG export terminals
• They will also vote a Rockies express 0.2 Bcf/d lateral project and a Northwest Pipeline compression project in Utah