Crude Breaks Above $104/Bbl as Saudi Supply Risks Intensify; Gas is Up as Weekend Weather Shifts Hotter

Crude breaks above $104/Bbl as Saudi supply risks intensify

• The WTI front-month contract rose $4.09 to $104.14/Bbl Monday morning (7:30 AM CT)
• Saudi Arabia said it halted operations on its 7 MMBbl/d East-West pipeline as a precaution following recent attacks, with no indication of when flows will resume
• The timing of a restart could emerge as a key driver of prices this week, as the pipeline provides one of Saudi Arabia’s most important alternatives to shipping crude through the Strait of Hormuz
• Inventories at Yanbu could sustain exports for five to seven days, but a longer outage would cause a “huge disruption,” said Suvro Sarkar of DBS Bank
• • Sarkar added that without greater clarity on repairs, the near-term outlook points toward a potential test of $120/Bbl
• US Energy Secretary Chris Wright cautioned traders against expecting an imminent breakthrough on Hormuz as Iran prepares to propose a new transit agreement to other Gulf countries
• • “Counting on a consensual agreement with Iran today is certainly not a good bet,” Wright said

Gas is up as weekend forecast changes shift prices higher

• Natural gas is up 7.3c to $2.904/MMBtu. (As of 07:45 AM CDT)
• The L48 warmed up over the forecast period considerably over the weekend, gaining 13.2°F of heat cumulatively across the range
• • The warming was centered east of the Rockies, primarily in the Midwest (Criterion)
  • This doesn’t change the overall pattern of cooling into the shoulder season over the remainder of September
• Power demand fell day over day 2.1 Bcf/d to 44.7 Bcf/d

LNG feedgas ticks higher, approaches 20 Bcf/d again

• Improvements across the gulf fleet have been leading feedgas demand steadily higher
• Commissioning at Golden Pass remains choppy, potentially a negative sign for future Golden Pass trains ramp up schedule