Crude Rises as Trump Escalates Pressure on Iran; Gas Flat as Power Demand Peaks in Forecast Range

Crude rises as Trump escalates pressure on Iran

• The WTI prompt-month contract rose $0.73 to $90.76/Bbl Thursday morning (7:30 AM CT)
• President Donald Trump said the US could launch additional strikes against Iran, posting that “at some point in the not too distant future, we will be taking Kharg Island”
• The latest exchange of threats between Washington and Tehran risks undermining ongoing diplomatic efforts and raises questions about the durability of the apparent ceasefire
• Despite the increasingly aggressive rhetoric, crude futures posted only modest gains as traders appear increasingly reluctant to assign a significant geopolitical risk premium to headlines or social media posts
• According to OPEC data, Iran’s crude oil production fell 546 MBbl/d month-over-month to 2.33 MMBbl/d in May as the US blockade and ongoing disruptions continued to weigh on the country’s export operations

Gas is flat as power demand peaks in the forecast range

• Natural gas is down -4.7c to $3.138/MMBtu (As of 07:30 AM CDT)
• Power demand increased another 2.5 Bcf/d this morning to 45.8 Bcf/d as average temperatures peaked around 78°F (Criterion)
• • Average L48 temperatures are expected to fall to 72°F over the next week
  • Forecast changes from yesterday show major cooling throughout the forecast range in the Midwest, especially around population centers like Chicago (CWG)
  • • The Midwest lost a total of 31.3°F over the next two weeks

L48 feedgas surges over 800 MMcf/d this morning up to 18.6 Bcf/d

• Corpus and Freeport LNG lead the charge, both gaining over 400 MMcf/d (Criterion)
• Two Elba Island LNG units resumed service after completing optimization work (S&P)
• • The overall optimization project is still underway, which will still add some incremental feedgas demand during planned outages
• Germany’s fifth floating LNG storage and regasification unit is coming online in September (NGI)
• • The unit will regasify 750 MMcf/d of LNG
  • Europe’s gas storage is currently at 43% of capacity
  • • Europe’s low storage levels incentivize bids on US LNG, providing a catalyst for LNG exports to remain at full capacity over the foreseeable future