WTI Holds Above $100/Bbl as Market Shrugs Off De-Escalation Report

Crude holds steady as Trump reportedly weighs potential off ramp

• The WTI prompt-month contract slipped $0.15 to $102.73/bbl on Tuesday morning (7:30 AM CT)
• The Wall Street Journal reported Trump is prioritizing a quicker end to the conflict over reopening the Strait, focusing instead on degrading Iran’s military capabilities
• • With prices steady this morning, the market appears increasingly inured to shifts in US policy or potential de-escalation signals
• Meanwhile, Iran launched a drone strike on a Kuwaiti oil tanker, signaling a continued willingness to target energy infrastructure and escalate tensions
• As fighting persists, Bloomberg reported that traffic through the Strait of Hormuz has dropped sharply, with only about six vessels per day compared to a typical flow of roughly 135
• In another step toward consolidating control over the waterway, Iran’s National Security Committee approved legislation to levy transit fees on vessels passing through the Strait, according to Fars News

Gas inches lower as shoulder season weather pattern holds

• Natural gas is down -1.1c to $2.876/MMBtu. (As of 07:30 AM CT)
• Although temperature forecasts looked cooler today, the change was minimal at -1.7°F from yesterday’s forecasts (Criterion)
• • Storage week temperatures are expected to be above 60°F this week, and despite minor cooling next week, are expected to return above 60°F after that
• Power and Industrial demand sit considerably above rescom demand in the 14-day demand forecast
• • Industrial demand is expected to hold steady around 22 Bcf/d over the forecast period, and Power demand is expected to decline relatively linearly from 30 Bcf/d to 27 Bcf/d over the forecast period (S&P)
• As we enter the summer season, power demand economics drive price more so than rescom, which can fall below 10 Bcf/d in peak summer months
• • Last year, rescom demand was below 10 Bcf/d from June-September

Entergy seeks approval for 1 Bcf/d of gas generation for Meta data center (S&P)

• Entergy Louisiana plans to locate 2 gas plants next to the planned data center and one north of Baton Rouge, LA
• • The generation and transmission are expected to take 3-4 years to build