Crude Extends Rally as Traders Weigh Mounting Supply Risks; Gas Flat on Minimal Forecast Change

Crude extends rally as traders weigh mounting supply risks

• The WTI front-month contract rose $1.48 to $102.87/Bbl Tuesday morning (7:30 AM CT)
• Saudi Arabia shut its 7 MMBbl/d East-West pipeline, a critical route that has allowed the country to bypass shipping disruptions in the Strait of Hormuz
• • The Associated Press reported that the pipeline is expected to remain offline for several weeks
• Meanwhile, Ukraine said it struck the Syzran refinery in Russia’s Volga region overnight, suggesting that neither country has formally committed to the energy truce announced by President Trump
• “Crude is caught between physical realities that continue to point to lost supply and rhetoric pointing toward potential de-escalation,” said Rebecca Babin of CIBC Private Wealth Group, adding that the market will ultimately place greater weight on physical barrels and infrastructure than on rhetoric

Gas flat on minimal forecast change

• Natural gas is up 2.8c to $2.924/MMBtu (As of 07:30 AM CDT)
• The L48 forecast stayed flat this morning, with the L48 gaining just 3°F over the forecast period (Criterion)
• Temperatures are creeping back up towards the 10-year average in the back half of the range
• • The week ending 9/25 has ticked up approximately 2°F over the last week, extending some cooling demand into late September

Feedgas pulls back, lead by losses at Cameron LNG

• US LNG feedgas demand fell by nearly 800 MMcf/d this morning to 18.8 Bcf/d
• Cameron LNG lead the losses, losing over 500 MMcf/d
• Maintenance on Cove Point’s Pleasant Valley outage is slated to begin September 19, with outage typically lasting around 20 days
• • A material feedgas decline is expected from this