Week Ending April 4

WTI craters as trade war escalates and OPEC+ pumps up the pressure

The WTI prompt-month contract settled at $61.99/Bbl on Friday, falling nearly $5 on the day and $7.37 over the week, hitting a four-year low following the week’s broad tariff announcement.

Early in the week, crude prices rallied on renewed geopolitical risk after President Trump floated the idea of imposing “secondary tariffs” on countries who purchase Russian oil. At the same time, Iran publicly rejected direct nuclear talks with the US citing Washington’s “maximum pressure” campaign, reigniting concerns over supply disruptions.

However, after Wednesday’s close, the White House rolled out its long-anticipated “Liberation Day” tariffs, broad and aggressive trade measures which include a blanket 10% levy on all US imports, and significantly higher rates for other countries. While energy was exempt, crude prices dropped more than $4/Bbl as markets digested the likely drag on global consumption. Supply-side developments compounded the downward pressure, with OPEC+ announcing its May production hikes would increase to 411 MBbl/d, raising fears of oversupply in an already fragile market.

On Friday, Beijing imposed a 34% tariff on all US imports, effective April 10, and introduced new export controls on rare earth materials. The escalation triggered a second straight day of sharp losses, sending WTI prices down nearly $5/Bbl, its lowest since the early stages of the COVID-19 pandemic.

Markets now face pressure from both sides: demand expectations are weakening amid escalating trade tensions, while supply is increasing with OPEC+ raising output. With WTI hovering near $62/Bbl, AEGIS maintains a neutral near-term view, citing limited upside in the current macro environment.

Natural gas prices erase last week's gains and fall below $4/MMbtu

The May Henry Hub contract fell 23c to $3.84/MMbtu this week, reversing all of last week’s gains. Winter '25/’26 settled 20c lower at $4.72/MMbtu, while Summer ’26 gained 6c to finish at $4.16/MMbtu. Prices were relatively stable until a sizeable sell-off on Friday saw prompt gas fall 23c to the lowest level of the week.

While the newly announced US tariffs have had a severe impact on global markets, domestic natural gas prices are likely to see little impact unless global prices weaken materially from current levels. Gas prices in Europe and Asia sold off amid fears of a slowdown in economic and industrial activity. ICIS said on Friday that “West and Central European gas demand in the industrial sector to take a hit in 2025 by some 3.6% for the remainder of 2025 and 2.6% in 2026.” Industrial demand accounts for about 27% of Europe’s total gas demand, and weaker demand could result in fewer spot LNG deliveries. Meanwhile, Rabobank said in a note that “some countries might look at increasing US LNG imports in the future to reduce tariffs, while others might do the opposite.” TTF natural gas prices fell $1.24 to $11.57/MMbtu on Friday, and while the arbitrage between Henry Hub and European and Asian hubs remains open, further weakness or trade disruptions could reduce profit margins for US LNG exporters.

So far this year, US LNG feedgas demand has been robust, averaging 15.72 Bcf/d. However, with temperatures along the US Gulf Coast beginning to warm up, inflows to export plants will begin to decline. Higher ambient temperatures reduce the efficiency of LNG plants, and summer maintenance will see flows at certain facilities temporarily drop. The total impact could result in feedgas demand averaging approximately 2 Bcf/d lower than total capacity.

AEGIS typically recommends hedging summer months with swaps and winter months with costless collars. However, elevated levels of call skew can be found in Summer ’26 and Summer ’27, potentially making costless collars attractive hedging instruments for the next few summer strips as well.