Crude Retreats as Prospects for US-Iran Agreement Improve; Gas Inches Higher Despite Further Cooling

Crude futures retreat as prospects for US-Iran agreement improve

• The WTI prompt-month contract fell $2.27 to $85.44/Bbl on Friday morning (7:30 AM CT)
• President Trump said a peace agreement with Iran could be reached as early as this weekend and indicated previously planned military action would not move forward
• Iranian media reported negotiators are close to completing a draft framework, though officials reiterated Tehran would not agree to relinquish authority over the Strait of Hormuz or fully return to pre-conflict arrangements
• Goldman Sachs lowered its 2027 crude oil price outlook by $5/Bbl, citing expectations for stronger supply growth and softer demand
• The bank now projects WTI will average $75/Bbl in 2027, compared with the Cal 2027 WTI contract trading at $73.89/Bbl (7:30 AM CT)
• Goldman also expects crude exports from Gulf producers to recover to more normal levels by late August, later than its prior forecast for late June

Gas inches up despite further cooling

• Natural gas is up 2.8c to $3.115/MMBtu (As of 07:37 AM CDT)
• The L48 cooled 5.1°F throughout the forecast period (Criterion)
• • The Midwest region lead the temperature losses again, losing 14°F over the forecast range
• Overall temperature anomalies over the next month show warmer than average temperatures west and south of the Appalachian Mountains, and some cooler than average temperatures in the Northeast and Midwest (CWG)
• CDDs peaked in the forecast range yesterday at 13, and are expected to average 10 over the next 2 weeks

The EIA reported a 108 Bcf build in working gas storage yesterday

• This puts inventories 151 Bcf ahead of the 5 year average
• A hot or even average Summer could point to inventories being inflated heading into this years withdrawal season