WTI Falls Below $80/Bbl as Deal Nears Completion; Gas Inches Up as Production Slips

WTI falls below $80/Bbl as US-Iran deal nears completion

• The WTI prompt-month contract dropped $3.53 to $77.22/Bbl on Tuesday morning (7:30 AM CT)
• Crude futures fell to their lowest level since March as the US and Iran prepare to sign an interim agreement in Switzerland on Friday, raising expectations that oil flows through the Strait of Hormuz will gradually resume
• Wall Street banks have begun lowering their oil price forecasts in response to improving supply expectations
• • Goldman Sachs now expects Brent to average $80/Bbl in Q4 2026, down from its previous forecast of $90/Bbl, citing a faster-than-expected recovery in Gulf exports and anticipating flows will return to pre-conflict levels by the end of July
  • Morgan Stanley also reduced its outlook, forecasting Dated Brent to average $90/Bbl in Q3 2026 versus a prior estimate of $100/Bbl
• Despite growing confidence that an agreement will be finalized this week, shipping companies continue to assess the timeline for safe passage through the strait
• The agreement includes a 60-day period during which vessels will be permitted to transit the strait without tolls, although questions remain regarding the structure of future navigation fees

Gas inches up as L48 production slips

• Natural gas is up 1.5c to $3.162/MMBtu (As of 07:30 AM CDT)
• Production slipped nearly 2 Bcf in this morning’s nominations to 108.8 Bcf/d
• • This is the lowest level in the last two weeks, and can be attributed to regular pipeline maintenance in the Northeast, Midwest, and South Central
• Weather forecast changes were mixed

Production and storage keep pace to meet winter demand (S&P)

• The EIA raised expectation for US gas output as higher oil prices prompt more drilling activity
• The EIA expects inventories to reach nearly 4 Tcf by the end of October, which would be 6.6% above the 5 year average

Cheniere maintains timeline for Train 7 at Corpus Christi LNG (S&P)

• Cheniere’s Train 6 started producing LNG on May 12
• Cheniere’s final liquefaction unit of their Stage 3 project is expected to be completed this fall
• The LNG exporter also reached FID last year on two additional units, Trains 8-9, which are expected to come online by the end of 2028
• • These trains will add upwards of 600 MMcf/d of feedgas demand to Corpus Christi LNG