Week Ending May 30

Crude retreats as market anticipates further OPEC+ supply increases

Crude oil prices trended lower this week as expectations for additional OPEC+ supply outweighed modest bullish factors. The WTI prompt-month contract fell $0.74 over the week, settling at $60.79/Bbl.

President Trump’s threat of fresh sanctions on Russia and a favorable U.S. trade court ruling on global tariffs both introduced bullish elements into the market. Crude briefly rallied alongside equities after the court declared many of Trump’s tariffs illegal. While these developments offered support, the market remained primarily focused on near-term supply additions.

OPEC+ continues to drive oil market sentiment. The group held a meeting on Wednesday to review long-term quota levels, with no major changes expected for the 2025–2026 horizon. In a market dominated by bearish sentiment, even neutral outcomes are being interpreted as constructive. Crude prices edged higher on the announcement, as the absence of new quota increases signaled no additional supply pressure.

A separate meeting scheduled for Saturday is expected to finalize July output volumes. If the current pace continues, OPEC+ could complete its 2.2 MMBbl/d unwinding process by October 2025, well ahead of the original schedule that stretched through September 2026.

The group is widely expected to approve another production increase for July, potentially exceeding 411 MBbl/d. This would mark the third consecutive monthly hike, following similar additions in April and May. According to JPMorgan, OPEC+ supply is now tracking 734 MBbl/d above the bank’s November forecast, prompting projections for a global surplus of 2.2 MMBbl/d in 2025. The bank also cut its global demand growth forecast by 300 MBbl/d, down to just 800 MBbl/d for the year.

The oil market remains caught between persistent OPEC+ supply growth and a fragile demand outlook. While supportive headlines offered some bullish relief, the dominant theme this week was the accelerating pace of supply restoration. As OPEC+ moves closer to completing its voluntary cut rollbacks, market concerns over a growing surplus are intensifying. AEGIS maintains a neutral outlook, with limited near-term upside.

July Henry Hub finishes near a multi-week low

Following the expiration of the June contract on Wednesday at $3.20/MMbtu, the new prompt contract, July, finished the week down 28c at $3.45/MMbtu. Winter ‘25/’26 was also impacted by the selling in the front of the curve, falling 21c to settle at $4.38/MMbtu. There were a few relevant news items this week ranging from a new FERC filing from Golden Pass LNG and more talk about cancelled Northeast pipeline projects possibly being revived.

Developers of the 2.6 Bcf/d Golden Pass LNG export plant requested authorization from FERC to hire more workers. Golden Pass said that without an increase in the size of the workforce, progress “will be delayed, extending the time needed for project completion”.  While the project developers are continuing to guide for a Q4 2025 or Q1 2026 startup, this project has seen numerous delays and this request for more workers could foreshadow additional delays. The timing of the startup could have a substantial impact on gas balances in Winter ‘25/’26, as an early start could see markets tighten sooner rather than later, while a delay would be a bearish risk.

Meanwhile, the Trump administration seems to be throwing support behind some canceled Northeast pipeline projects. It was reported that Trump received a concession from NY governor Kathy Hochul. That in exchange for allowing the construction of the Empire offshore wind farm, NY would not block the construction of new gas pipelines. Pipeline operator and developer, Williams, is looking to restart work on the Northeast Supply Enhancement project which was canceled in 2024. There has also been talk of potentially restarting the process to build the canceled Constitution pipeline. The Northeast Supply Enhancement Project would increase gas deliverability in the New Jersey area by about 400 MMcf/d, while the Constitution Pipeline would connect Appalachian supply with demand centers in the Northeast. Pipeline capacity out of the Marcellus and Utica has been constrained for some time and if these projects were to be advanced, it could allow for additional production from the region or, initially, tighter basis spreads.

AEGIS continues to hold a neutral view on the balance of Summer ’25, and a bullish view on Winter ‘25/’26 and beyond. The bullish call is driven by the sizeable amount of new LNG demand on the horizon, which will result in a significant call on gas supply.