Crude Rallies as Uncertainty Persists Around Negotiations; Gas Slips as Warming Stalls

Crude prices rally as uncertainty persists around US-Iran negotiations

• The WTI prompt-month contract rose $2.51 to $89.87/Bbl on Monday morning (7:30 AM CT)
• Washington and Tehran continue to exchange proposals and revisions to a draft agreement aimed at extending the ceasefire and reopening the Strait of Hormuz, though the status of negotiations remains unclear
• Iran has indicated that any broader agreement will likely depend on progress toward a ceasefire in Lebanon, where Israel has launched its largest military operation in the country in more than two decades
• Crude prices are likely to remain sensitive to headlines as the market continues to balance optimism surrounding a potential deal against the risk of renewed escalation
• According to Goldman Sachs, April oil sales data from China and Western Europe suggest roughly 2 MMBbl/d of downside risk to the bank's global oil demand estimates for the month
• • When combined with ongoing Middle East supply disruptions, the bank estimates this could create approximately $10/Bbl of downside risk to its 4Q26 Brent price forecast of $90/Bbl

Natural gas falls as the forecasted warming stalls

• Natural gas is down -6.5c to $3.225/MMBtu (As of 07:30 AM CDT)
• Forecasted temperatures were gaining steadily into mid-June late last week, however over the weekend there was minimal overall change to the forecasted L48 average temperatures
• • Temperatures are hovering around the 10-year normal throughout the forecast period, and look to stall around 75°F in the second week of June
  • The CDD increase stalled in mid-June as well around 10/d (Criterion)
• The warming stall was partially offset by a production slip of just over 1 Bcf/d this morning, however this is likely due to first of month nominations which will become clear in the late cycle

L48 feedgas demand slipped to 17.9 Bcf/d despite Freeport making a comeback (Criterion)

• Sabine Pass noms came in lower as outages in feeding pipelines began

Permian forward prices rise as market differentiates between near-term infrastructure constraints and longer-term expectations (NGI)

• The Waha forward curve goes non-negative in October, with December currently trading close to $3/MMbtu