Crude Posts Modest Gains as Traders Assess Hormuz and Russia Risks; Gas Up as Freeport Rebounds

Crude posts modest gain as traders assess Hormuz and Russia risks

• The WTI prompt-month contract rose $0.25 to $82.48/Bbl Thursday morning (7:30 AM CT)
• Crude edged higher as traders weighed signs of improving tanker traffic through Hormuz against the risk of an escalation in the Russia-Ukraine war
• Iran and Oman are reportedly moving closer to a revenue-sharing agreement for traffic through the strait, while weaker-than-expected US sanctions have added to hopes for another ceasefire
• • “The market has started pricing in the possibility of another ceasefire emerging,” said Saul Kavonic of MST Marquee
• President Trump said approximately 10 MMBbl of oil moved through Hormuz on Tuesday as Gulf producers continued to bring shipments back online
• • Saudi loadings from ports inside the Gulf have risen sharply as Houthi threats make Red Sea exports more difficult, according to Bloomberg
  • Kuwait and Qatar have restored shipments to around 70% of pre-conflict levels, with an estimated 7–8 MMBbl/d now moving through the strait
• Risks remain, however, after the UK Maritime Trade Operations reported that a tanker was struck in Hormuz on Tuesday
• Meanwhile, reports that Russia is preparing to escalate the war in Ukraine have raised the prospect of further strikes on Russian refineries and ports, potentially limiting Moscow’s ability to redirect crude into exports

Gas extends gains as production stalls and September forecast warms

• Natural gas is up 4.6c to $2.888/MMBtu (As of 07:30 AM CDT)
• L48 production slipped 0.7 Bcf/d to 111.4 Bcf/d, marking a fresh two-week low
• Overall L48 weather shifted hotter 2.1°F over the forecast period, with gains primarily centered in the 11-15 day range in the Midwest (Criterion)
• The potential hurricane in the Atlantic directed it’s path towards the Gulf of America in today’s model runs, however the intensity of the storm was also revised lower

Freeport leads feedgas higher, as maintenance work appears to be ending

• Freeport nominated for 2.1 Bcf/d this morning, which brought L48 overall feedgas demand to 19.4 Bcf/d (Criterion)

The EIA releases its weekly natural gas storage report today, with median analyst expectations at a 15 Bcf injection for the week ending 8/21 as reported by Bloomberg