Crude Rallies as Ceasefire Breaks Down; Gas Continues Losing Streak

Crude rallies after US-Iran ceasefire breaks down

• The WTI prompt-month contract gained $2.30 to $80.44/Bbl on Tuesday morning (7:30 AM CT)
• WTI futures climbed above $80/Bbl after the US reinstated a naval blockade and Iran launched attacks on oil tankers transiting the Strait of Hormuz
• • The UAE reported that two of its "dark" tankers were hit while traveling through the southern Omani shipping corridor
  • Bloomberg reported the vessels had been operating with their transponders switched off to reduce their visibility, a tactic that has become increasingly common in recent weeks and has helped support higher crude flows through the Strait
• The renewed security risks could discourage tanker traffic through Hormuz in the near term, with some shipowners potentially diverting cargoes to alternative routes, including the Red Sea
• • That alternative also carries risks, however, as the Yemeni Houthis and Saudi Arabia have resumed exchanging strikes, raising the prospect of a broader regional conflict that could threaten both Saudi oil exports and shipping through the Red Sea
• The Cal 2026 strip is trading above $76/Bbl, while the Cal 2027 strip has slipped below $71/Bbl

Gas Slips further on bearish demand revision

• Natural gas is down -2.7c to $2.87/MMBtu (As of 07:30 AM CDT)
• Criterion revised demand down 7 Bcf/d cumulatively over the forecast period
• • L48 average temperatures are expected to briefly move above the 10-year average tomorrow before settling back on the 10 year average throughout the forecast period
• L48 feedgas demand is at 18.2 Bcf/d as Sabine Pass and Freeport continue to grapple with maintenance (Criterion)

CAISO thermal stack expands, reducing reliance for gas-fired power generation

• Renewable generation reached 18.5 GW at 2:25 PM, while natural gas was at 13.2 GW at the same time
• On June 15 at 1:40 PM, renewable power generation hit a high of 26.8 GW, while natural gas was at 3.2 GW
• Solar has topped CAISO’s fuel mix for the last four months, and is leading July market share at 37.8% (S&P)

PJM Interconnection sets new all-time peakload record during early July heat wave

• PJM reported a peakload record of 168.158 GW on July 2, spurred on by record breaking air temperatures (S&P)
• • The previous record was set 20 years ago at 165.563 GW
• Gas made up around 43% of the fuel mix when the record was set, followed by Nuclear and Coal at around 20% and 17% respectively