Crude Holds Steady as Standoff Persists; Gas Rebounds as Weather Models Reverse Sharply

Crude holds steady as US-Iran standoff persists

• The WTI prompt-month contract rose $0.06 to $86.89/Bbl Friday morning (7:30 AM CT)
• Treasury Secretary Scott Bessent said the administration will provide additional details Monday on its campaign to further isolate Iran economically
• The measures are expected to target Tehran directly, while potentially extending to countries that continue doing business with Iran, including China
• Beijing pushed back against the threat of additional sanctions, arguing that economic pressure will not resolve the dispute and calling instead for a diplomatic solution
• • “It is unclear to me how we are going to choke off Iran more than we have financially without triggering immense blowback from China,” said Josh Lipsky of the Atlantic Council
• Meanwhile, Rystad Energy expects Chinese crude purchases to increase by as much as 1.2 MMBbl/d from 3Q through year-end 2026 after the world’s largest crude importer reduced purchases and refinery runs in response to the Middle East-driven price spike

Gas moves higher weather models reverse sharply hotter

• Natural gas is up 2.6c to $2.759/MMBtu (As of 07:30 AM CDT)
• The L48 gained north of 13°F across the forecast period, lead by the South Central and the Midwest (Criterion)
• The EIA reported a weekly build of 16 Bcf in natural gas inventories, bringing L48 working gas storage to 3,169 Bcf

East regional storage has rebounded rapidly this summer, despite heat and power demand

• East region storage started injection season below the 5 year average, at 277 Bcf at the start of April
• It’s now at 708 Bcf, above the 683 Bcf average for this time in the year
• BofA analysts point to a risk of price induced Appalachia curtailments this fall, due to time spread (NGI)

Permian processing capacity buildout to lag behind egress

• Roughly 4.55 Bcf/d of new Permian processing capacity is slated through 2029, which falls significantly below the amount of egress slated to come online (NGI)
• Analysts point to a potential quality-driven bottleneck that could limit basis relief over the next few years