Crude Rebounds as Iran Warns Conflict Could Widen; Gas Edges Lower on Mixed Forecast Shifts

Crude rebounds as Iran warns conflict could widen

• The WTI prompt-month contract rose $1.68 to $93.84/Bbl Thursday morning (7:45 AM CT)
• Crude futures moved higher after senior Iranian adviser Yahya Rahim Safavi warned that renewed attacks could expand the conflict into the Indian Ocean and potentially beyond
• • “This is a market with very little shock absorbers left, so any credible headline pointing to another potential physical disruption, or escalation, has a disproportionately outsized impact on prices,” said Emily Ashford of Standard Chartered
• Iranian President Masoud Pezeshkian said Tehran remains open to negotiations but will not guarantee freedom of navigation through the Strait of Hormuz while US sanctions and the blockade of Iranian ports remain in place
• Energy Secretary Chris Wright said the administration is considering ways to increase domestic diesel supplies, though he pushed back against a complete export ban
• • “Nobody wants a full blanket ban of zero exports of diesel,” Wright said, adding that officials are discussing “what’s the most efficient way to get more diesel into the United States of America and continue maximum flows of gasoline and jet fuel”
  • Oil executives have opposed export restrictions, warning they could reduce refinery output, tighten global supplies and ultimately push fuel prices higher

Gas edges lower on mixed forecast shifts

• Natural gas is down -1.7c to $3.006/MMBtu (As of 07:30 AM CDT)
• The L48 gained 2.5°F this morning, led by heat gains in East, but offset by some losses in the Rockies and West
• Average temperatures are expected to climb into the start of October to around 71°F, before gradually falling to around 66°F by the second week
• • Heating demand usually starts to compound when average temperatures fall below 65°F (Criterion)
• Feedgas demand has been in the 18.7 Bcf/d range since Cove Point went down for maintenance

Gas spot prices move higher on signs of heating demand with lower production

• Cool shots in the Midwest are bringing early signs of wintery weather
• Nor’easter, a powerful storm, is building along the east coast, which is expected to bring some cooler winds and early heating demand through this weekend