Crude Steadies Despite Second Day of US-Iran Clashes; Gas Falls Despite Bullish Weather Shift

Oil steadies despite second day of US-Iran clashes

• The WTI prompt-month contract gained $0.27 to $73.79/Bbl on Thursday morning (7:30 AM CT)
• US forces carried out a second consecutive day of strikes against Iran, while Tehran responded by targeting several sites in the Persian Gulf
• According to Bloomberg, vessel traffic through the Strait of Hormuz slowed to near-halt conditions on Thursday
• • Most observed transits followed an Iran-sanctioned route closer to the northern side of the strait, while the US-backed Omani shipping corridor saw little to no activity
• Although the ceasefire remains in effect, the latest military exchanges highlight the fragile security situation in the region, suggesting any normalization of Hormuz shipping and crude production is likely to be uneven
• • Oil prices have adjusted higher as markets reassess the geopolitical risk

Gas prompt falls despite power demand rebound

• Natural gas is down -2.7c to $3.185/MMBtu (As of 07:30 AM CDT)
• Power demand picked up nearly 2 Bcf/d today to just over 47 Bcf/d (Criterion)
• Weather forecasts shifted warmer 4°F this morning, with gains centered in the middle of the forecast period
• • Peak CDDs in the range are now forecasted to be higher than the 17 CDD peak on July 3 at 18 CDDs on July 16-17 (Criterion)
• High temperature anomalies are most extreme in the Midcon and Bakken over the forecast range, but the Northeast is still grappling with warmer than average temps (CWG)

US gas-fired power burn lags 2024 despite summer heat (S&P)

• Renewable penetration, higher gas prices, and slower coal retirements are limiting gas’ share of the power stack
• With gas production trending near record highs, weaker gas-fired power demand could contribute to building a sizeable storage surplus