Crude Rises as Deal Stalls; Gas Jumps on Large Model Change

Crude rises as Iran’s Hormuz deal stalls

• The WTI prompt-month contract rose $1.38 to $79.56/Bbl Monday morning (7:30 AM CT)
• Iran reiterated that any reopening of the Strait of Hormuz would depend on the US lifting restrictions on Iranian shipping, releasing frozen assets, and providing compensation for damages from the war
• President Trump indicated he is willing to allow economic pressure on Tehran to build rather than immediately resume military action to force the strait open
• • “We are just watching Iran with its huge inflation and the fact they have no money,” Trump told Axios in an interview
• Shipping risks also persisted over the weekend, with another tanker targeted in Hormuz, while Yemen’s Houthis claimed an attack on Saudi Arabia’s 400 MBbl/d Jazan refinery
• The threat of another escalation across the Middle East continues to support a geopolitical risk premium in crude, while limited tanker traffic through Hormuz keeps supply concerns elevated
• • Haris Khurshid, CIO of Karobaar Capital, said the market is likely to maintain a bullish bias as long as traders are pricing the possibility of further disruption rather than a clear return to normal flows

Gas Jumps as heat builds in the forecast

• Natural gas is up 11.5c to $2.777/MMBtu (As of 07:30 AM CDT)
• The L48 experienced unusually large model changes over the weekend
• • It was the biggest weekend forecast gains seen this summer, lead by strong southern heating (CWG)
• The L48 gained 11.5°F over the forecast range, lead by large gains east of the Rockies (Criterion)
• • This brings temperatures to average to above average over the forecast range, from hovering below average on Friday
• Feedgas demand pushes back toward 19 Bcf/d amidst Freeports continued maintenance (Criterion)

Targa says Permian gas production curtailments mostly reversed (S&P)

• Kneale, Targa’s President, said the “vast majority” of the roughly 300 MMcf/d of gas shut-in behind their Permian systems is are back on their system