Crude Steady After US China Talks; Gas Flat as Production Tapers

Crude steady after US-China talks

• The WTI prompt-month contract fell $0.71 to $100.31/Bbl on Thursday morning (7:30 AM CT)
• Oil futures were relatively stable following a meeting between President Trump and Chinese President Xi Jinping, where discussions centered on the conflict with Iran and broader energy cooperation between the US and China
• • A White House official said Xi opposed proposals to impose tolls on vessels transiting the Strait of Hormuz and expressed interest in expanding oil purchases as China looks to diversify supply sources and reduce reliance on Middle Eastern flows
• According to the official, both leaders agreed the Strait must remain open to preserve the uninterrupted flow of global energy supplies
• Despite the diplomatic tone, tensions in the region remain elevated. A UK maritime security organization reported that unauthorized personnel boarded a commercial vessel near the entrance to the Strait of Hormuz, with the ship now reportedly heading toward Iranian waters
• • The incident adds to growing signs that Tehran continues to exert influence over shipping activity in the region even as a ceasefire has remained in place since early April

Gas flat as production tapers

• Natural gas is down -2.4c to $2.84/MMBtu (As of 07:30 AM CDT)
• L48 production slipped another 0.3 Bcf/d this morning to 108.8 (Criterion)
• • Total supply remained flat day over day due to offsetting change in Canadian imports
• Weak pricing due to mild shoulder season temperatures has led to curtailments of dry gas production
• • EQT mentioned in their Q1 earnings call they would be strategically curtailing 10-15 Bcf of production in 2Q26, with potential to shut in a “whole lot more” if economics justify it
  • APA Corporation also mentioned in their Q1 earnings call that price-related curtailments would continue through 2Q26, driven by “the current forward strip for Waha

US FERC denies challenges to Mountain Valley’s Southgate project (S&P)

• In a May 11 order denying rehearing requests, US FERC upheld its approval of MVP’s amended Southgate project
• The project will add 31.1 miles of pipeline extension to North Carolina to bring 550 MMcf/d of pipeline capacity
• • US FERC cited the projects significance in adding capacity to diversify supply to the Northeast in extreme weather events

The DOE will release its weekly change in estimated storage today, with a median Bloomberg estimate of an 87 Bcf injection