Crude Slides a Saudi Pipeline Restart Eases Supply Concerns

Crude slides as Saudi pipeline restart eases supply concerns

The WTI prompt-month contract fell $2.18 to $93.68/Bbl Tuesday morning (7:30 AM CT)
Crude futures moved lower as Saudi Arabia prepared to resume flows through its critical 7 MMBbl/d East-West pipeline, raising expectations that exports from the Red Sea port of Yanbu could soon restart
- “The reopening of the East-West pipeline is forcing some additional reduction in the geopolitical risk premium,” said Ole Hansen of Saxo Bank
- However, analysts expect the pipeline to initially operate at reduced rates and do not anticipate a quick return to full capacity
Traders are also monitoring potential diplomatic developments as President Trump and Iranian President Masoud Pezeshkian attend the UN General Assembly in New York
Qatar’s foreign ministry said it is working to persuade the US and Iran to resume negotiations, though the prospects for an agreement remain uncertain
Despite the improving supply outlook, Barclays said oil prices may need to rise by as much as 50% before the market returns to balance if current disruptions persist
- Inventory and consumption indicators suggest that “prices have a long way to go before supply and demand converge,” Barclays analyst Amarpreet Singh wrote, adding that risks to the bank’s price forecasts remain skewed to the upside

Gas ticks higher as demand strengthens

Natural gas is up 0.1c to $2.837/MMBtu (As of 07:45 AM CDT)

Rescom moved up 2.5 Bcf/d this morning to 11.2 Bcf/d, Power also rebounded, up 2.3 Bcf/d to 41.1 Bcf/d

On the supply side, production fell by 1.7 Bcf/d to a fresh two-week low at 110.8 Bcf/d (Criterion)

Pennsylvania production declines with prices

Pennsylvania IFO says second quarter production was down 31 Bcf from last year (NGI)

IFO said spot prices were also down in Q2, down to $2.11, or 11.3% lower than last year