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Daily First Look
Daily briefThomas Liardon

Crude Eases Despite Escalating Fighting in Yemen; Gas Inches Higher as Production Dips

Crude eases despite escalating fighting in Yemen

  • The WTI prompt-month contract fell $0.91 to $90.20/Bbl Monday morning (7:41 AM CT)
  • Prices moved lower after sources confirmed that Saudi Arabia’s critical East-West pipeline continued operating normally, contradicting an earlier report that a new attack had halted flows
  • Meanwhile, Yemen’s internationally recognized government launched a major military campaign to recapture territory controlled by the Houthis
  • Saudi Aramco CEO Amin Nasser warned that the global oil stockpiles available to cushion supply disruptions have become “scarily thin,” leaving markets vulnerable unless flows through the Strait of Hormuz fully recover
    • Nasser said rebuilding depleted inventories while meeting demand could take as long as two years
  • Kuwait is producing oil at roughly 75% of its prewar level, according to Kuwait Petroleum Corp CEO Sheikh Nawaf Al-Sabah

Gas inches higher as production dips

  • Natural gas is up 1.3c to $3.048/MMBtu (As of 07:41 AM CDT)
  • L48 dry gas production fell 2.3 Bcf/d since Friday, led by a substantial 1.7 Bcf/d drop from Appalachia
    • The production drop in Appalachia is represented by drops on several pipes likely driven by a combination of maintenance and producer curtailments
  • Modeled demand shifted lower, 12.5 Bcf of demand was cut from the two-week forecast
    • Weather warmed in the East; however, it cooled significantly in the Rockies and West
  • Feedgas recovers above 19 Bcf/d led by recovery at Freeport
    • Feedgas fell late last week, led by an unplanned outage at Freeport LNG, but this appears to be over today, with flows recovering 763 MMcf/d since Friday

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