Crude Reverses Gains as US Considers Temporary Sanctions Relief; Gas Moves Past $3/MMBtu

Crude slips on reports US may consider temporary Iran sanctions relief

• The WTI prompt-month contract fell $1.12 to $104.30/Bbl on Monday morning (7:30 AM CT)
• Crude futures reversed earlier gains after Iran’s Tasnim news agency reported that the US could allow limited sanctions relief on Iranian oil exports during ongoing negotiations, though Washington has not confirmed any waiver discussions
• Over the weekend, President Trump posted on his Truth Social account that “For Iran, the Clock is Ticking, and they better get moving, FAST, or there won’t be anything left of them. TIME IS OF THE ESSENCE!”
• Physical market dynamics in both the US and China have also helped ease some near-term pressure in prompt markets
• • US crude exports have climbed to record levels, increasing available supply into global markets
  • Meanwhile, Chinese crude imports and refinery activity have weakened, with processors running the lowest volumes since 2022, according to Bloomberg data

Natural gas prompt moves past $3/MMBtu

• Natural gas is up 11.4c to $3.074/MMBtu (As of 07:30 AM CDT)
• L48 weather forecasts experienced minor change from Friday overall
• • The Rockies region cooled almost 26°F from Friday, but was offset by most of the rest of the L48 for a minor change
• Power demand gained 5.4 Bcf/d from Friday as weather warms to a L48 average of 74°F (Criterion)
• • Modeled demand is forecasted to stay elevated through the back half of the week before fading into this weekend

Natural gas prices begin factoring El Ñino risks (NGI)

• El Ñino typically boosts global temperatures and contributes to hotter weather extremes
• The latest outlook by the NOAA CPC showed an 82% chance of El Ñino developing by July

Data center build out looks stalled across the US (NGI)

• Hyperscalers are planning major capex this year of $650-700 billion to power AI, however a gap is widening between announced timelines and project progress
• Gas-fired generation will be the backbone of the buildout over the next several years
• • Roughly 80% of announced US data center additions sit in a pre-construction phase