Crude Advances Despite Recovery in Middle East Exports; Gas Prices Stabilize as Temperature Forecasts Average

Crude advances despite recovery in Middle East exports

• The WTI prompt-month contract rose $0.95 to $90.33/Bbl Wednesday morning (7:30 AM CT)
• JPMorgan and Goldman Sachs estimate that Middle East crude exports are approaching prewar levels after Saudi Arabia increased shipments through its East-West pipeline
• • Goldman Sachs estimates that crude exports from Persian Gulf producers reached 19 MMBbl/d over the week through Monday
  • JPMorgan estimates that the 10-day average of Middle East crude exports recovered to 17.5 MMBbl/d
• “We are seeing an accelerated bearish shift” as additional supplies reach the market, said Arne Lohmann Rasmussen of Global Risk Management
• • Brent put options have outpaced calls for their longest stretch since June
  • Meanwhile, second-month 25-delta skews for WTI and Brent have fallen to their least bullish levels since January and June, respectively
• The durability of the recovery remains uncertain, with Bank of America’s Francisco Blanch questioning whether higher flows reflect progress in US-Iran negotiations or a more lasting shift in control of the Strait of Hormuz
• Despite improving regional exports, the Bal 2026 strip rose to $88.68/Bbl while the Cal 2027 strip climbed to $79.06/Bbl (7:30 AM CT)
• Separately, the US Department of Energy offered to loan energy companies up to 40 MMBbl of crude from the Strategic Petroleum Reserve

Gas price stabilizes as early shoulder season temperatures look average

• Natural gas is up 1.2c to $3.023/MMBtu (As of 07:30 AM CDT)
• L48 average temperatures are at 71°F this morning, and are expected to steadily decline over the next two weeks towards the mid-60s
• The first day of HDDs is expected in the forecast range now, on October 14 (Criterion)
• Most days in the forecast range are firmly under 2 CDDs, putting us firmly in shoulder season with very minimal weather driven gas demand

Supply pulls back as gas production and Canadian imports decline

• Production fell roughly 800 MMcf/d this morning, led by losses in the South Central, Rockies, and Northeast regions
• Canadian imports also declined led by a cut out of the Midwest corridor (Criterion)
• Total supply is at a fresh two-week low at 114.7 Bcf/d, with dry gas production below 110 Bcf/d
• Appalachian production has been gaining in late noms vs early this week, in the range of 200-900 MMcf/d
• • However early noms stay low, still at approximately 35 Bcf/d, or 1.6 Bcf/d under August production levels

Kinder Morgan expands Southeast footprint (NGI)

• FERC authorized Mississippi Crossing Project last Thursday, which will transport up to 2.1 Bcf/d to Southeast markets targeted in Mid-2028
• They seek FERC approval for South System 4 Expansion project to increase South Main Line capacity by roughly 1.3 Bcf/d
• They launched a binding open season for their Southeast Connector Project, which is being dubbed the SEC Extension
• Southeast gas markets have traded at a healthy premium to Henry Hub in recent months due to strong power demand