Crude Jumps as Talks Stall on US Red Lines; UAE Moves to Exit OPEC

Crude advances as US-Iran negotiations hit a standstill

• The WTI prompt-month contract gained $3.37 to $99.74/bbl on Tuesday morning (7:30 AM CT)
• Donald Trump was reportedly dissatisfied with Iran’s latest proposal, as the US continues to hold firm on key “red lines,” including preventing Tehran from developing a nuclear weapon
• Flows through the Strait of Hormuz remain effectively halted, with Iran maintaining control of the waterway and the US continuing to enforce its blockade on Iranian-linked vessels

UAE moves to exit OPEC amid ongoing conflict

• Crude pared earlier gains following reports that the United Arab Emirates plans to withdraw from OPEC
• The UAE signaled that current market disruptions require greater flexibility to respond to supply shortages, rather than adhering to group-wide production decisions, according to Energy Minister Suhail Al Mazrouei
• Market reaction to the announcement has been relatively muted, likely reflecting the already tight physical backdrop driven by the prolonged disruption of flows through Hormuz

Natural gas flat as total supply gains offset some added back demand

• Natural gas is down -0.7c to $2.543/MMBtu (As of 07:35 AM CDT)
• Weather cooled another 6.2°F across the L48 forecast period (Criterion)
• • Cooling was centered in the Midwest, south central, and southeast
• Rescom is forecast to work its way back up above 23 Bcf/d by Saturday, May 2, before falling back to the 15 Bcf/d range again (S&P)
• Also on May 2, Cameron LNG will lose over 500 MMcf/d of feedgas demand for an ESD test

LNG feedgas demand monthly average is 20.4 Bcf/d (S&P)

• Currently, LNG volume is a bit down off this average as it deals with the NGPL CS 302 outage at Sabine Pass

NYISO Summer Reliability Assessment warns of declining power reserve margins (S&P)

• The New York Independent System Operator assessment found that reliability margin under baseline summer conditions is 417 MW, lowest in history
• High summer temperature scenarios pose extreme risk to the grid
• • Capacity deficits can lead to a higher demand for gas-fired generation