Crude Rises as Middle East Risks Outweigh Ceasefire Claims; Gas Plunges as Forecasts Warm

Crude rises as Middle East risks outweigh ceasefire claims

• The WTI prompt-month contract rose $1.89 to $93.74/Bbl Monday morning (7:41 AM CT)
• Crude futures advanced after Ukraine cast doubt on an “energy ceasefire” announced by President Donald Trump
• Meanwhile, tensions continued to escalate in the Middle East as Saudi Arabia faced renewed Houthi attacks, including deadly strikes on Riyadh’s international airport
• Iran has also intensified its maritime campaign ahead of the US midterm elections, with 15 confirmed tanker attacks reported so far in October
• • Some analysts believe limited US strikes could curb Iranian attacks and help Washington rebuild leverage
• Goldman Sachs raised its December Brent forecast by $5/Bbl to $90/Bbl, citing persistent risks to Middle Eastern supply
• • The bank estimates that Persian Gulf exports, including so-called dark shipments, have recovered to 2025 average levels and that the global oil market was “roughly balanced” in September
  • However, risks remain skewed to the upside as further damage to oil infrastructure or intensified shipping attacks could push Persian Gulf production back below prewar levels
  • The bank expects WTI to remain unusually discounted to Brent due to elevated shipping costs between the US and Europe
  • • Goldman forecasts WTI at $81/Bbl in December, up from $80/Bbl previously, and $73/Bbl in 2027, down from $75/Bbl

Gas plunges on weekend model shifts warmer

• Natural gas is down -12.1c to $3.099/MMBtu (As of 07:41 AM CDT)
• Models shifted much warmer over the weekend, with the 11-15 day range now showing above average temperatures across the L48
• Temperatures will be warmer than average east of the Rockies on all but two days according to forecasts this morning, a signal of weak shoulder season demand
• October is now forecast to be the third warmest on record, behind only 2021 and 1963 (CWG)

Isaias supply loss lingers, outweighing demand loss

• Through this morning, offshore supply losses from Hurricane Isaias of 8.6 Bcf have outweighed demand losses of 3.6 Bcf
• Offshore receipts are still recovering slowly, and the balance now predicts a tightening effect of roughly 7 Bcf (Criterion)

Freeport LNG still has a one-train outage

• Last week, Freeport cut their noms in late cycle by around 700 MMcf/d each day
• The nom cuts were followed by a shutdown of Train 2 on Oct. 2 for compressor maintenance
• Since the shutdown, HSC spot discount to Henry Hub has widened by around 18c