Crude Falls as Middle East Exports Recover; Gas Ticks Up as Prompt Rolls to November

Crude falls as Middle East exports recover

• The WTI prompt-month contract fell $2.20 to $90.40/Bbl Tuesday morning (7:30 AM CT)
• Saudi Arabia restored roughly half of the flows through its East-West pipeline after drone strikes halted the critical export route
• • Pipeline flows reached at least 3.5 MMBbl/d, while crude loadings from the Red Sea port of Yanbu resumed last week
• Qatar continues to mediate between the US and Iran, exchanging proposals aimed at reviving negotiations, according to Foreign Ministry spokesperson Majed Al-Ansari
• “Geopolitical risks remain unresolved, but crude is flowing through the strait and through Saudi’s western port,” said Ole Hansen of Saxo Bank, adding that “it’s difficult to hold onto longs as it would require an escalation to be justified”
• Goldman Sachs continues to view the risk of further escalation as elevated, partly because the recovery of roughly 80% of regional flows has limited upward pressure on prices
• • The recovery in exports could reduce Iran’s leverage and increase the incentive for Tehran to escalate the conflict in an effort to renew pressure on oil markets

Gas ticks up as prompt contract rolls into November

• Natural gas is up 0.6c to $3.112/MMBtu (As of 07:45 AM CDT)
• The October contract rolled off yesterday, settling at $3.00/MMBtu
• • Some premium is added to the contract now that Withdrawal season is prompt

Appalachia production still lags pre-TCO outage levels as basis prices fall

• Northeast production came in just above 35 Bcf/d, about 1 Bcf/d below the monthly average from September (Criterion)
• TETCO M2 Basis has taken a hit, and has not recovered, currently at -$1.59/MMbtu this morning

US and Canada LNG growth into the 2030s continues with two developments

• Shell takes FID on project to double LNG Canada capacity
• US FERC determines three-train Sabine Pass LNG expansion to have little impact, FID is targeted in 2027 (S&P)