Crude Falls as Israel-Lebanon Enter Ceasefire; Gas Moves Higher as Warming Continues

Crude falls as Israel-Lebanon ceasefire fades risk premium

• The WTI prompt-month contract fell $3.17 to $92.85/Bbl on Thursday morning (7:30 AM CT)
• Oil prices moved lower after a conditional ceasefire between Israel and Lebanon reduced immediate geopolitical concerns and improved prospects for renewed US-Iran diplomacy
• • Iran continues to view strikes on Lebanon as a violation to the ceasefire agreement between the US and Iran while President Trump has indicated he prefers to treat the issues separately
• Iranian Foreign Minister Abbas Araghchi said Wednesday that negotiations with the US have yet to produce meaningful progress
• Meanwhile, Trafigura warned that global energy markets are approaching an inflection point as several factors that have helped contain prices begin to fade
• • According to Trafigura Chief Economist Saad Rahim, elevated inventories, strategic stockpile releases, and weaker demand across parts of Asia and Africa have provided temporary relief but do not address underlying supply risks
• Similar concerns have been expressed by other major trading houses with Vitol board member Tom Baker saying consumers in Europe and the US appear largely unaffected by current supply risks and continue to operate as normal
• • Vitol estimates roughly 4 MMBbl/d of demand has been deferred globally, with some buyers postponing purchases while waiting for further clarity on a potential US-Iran agreement
• Bal 2026 and Cal 2027 continue to trade just below $85/Bbl and $75/Bbl, respectively.

Gas is up as warm weather extends further past the average

• Natural gas is up 6.7c to $3.281/MMBtu (As of 07:30 AM CDT)
• Forecasted temperatures warmed this morning across the L48 (CWG)
• • In the 1-10 day range, much of the Midcon and Rockies regions gained over 5°F
  • In the 11-15 day range, temperatures warmed considerably on the west coast
• L48 power burn picked up this morning by over 400 MMcf/d as warming into the weekend begins (S&P)
• • Some cooling is expected into early next week before picking back up into late next week
  • CDDs are now expected to peak over 12 in the forecast range with the recent warming

Delfin LNG, the first floating LNG export project, made FID (NGI)

• Feedgas to supply the terminal is planned to be delivered from Transco station 44
• • Demand from Delfin is likely to most closely impact Transco Zone 2 spot prices
• Delfin is targeting commercial operations by 2031