Week Ending June 27

Crude Prices Take Big Weekly Loss Following the Ceasefire in the Middle East

Crude prices posted a big loss this week following the ceasefire between Israel and Iran. The prompt-month contract dropped nearly $10 on the week to settle at $65.52/Bbl on Friday. The geopolitical risk premium introduced over the last two weeks has dissipated and prices are now back to pre-conflict levels.

Over the weekend, the U.S. struck key nuclear facilities in Iran increasing fears of supply disruptions in the Middle East. Fears of supply changes quickly faded as Iran retaliated with a very measured and telegraphed attack. Soon after, President Trump announced a ceasefire between the two countries. The President also took to social media to encourage China to purchase oil from Iran. The comments appeared to contradict the Trump administration’s “maximum pressure” campaign against Iran. Energy Secretary Chris Wright said the U.S. currently maintains sanctions targeting Iran’s oil industry, but CNN reported that the administration is considering the easing of sanctions to incentivize Iran to restart nuclear talks.

The market has now turned its attention to U.S.-China trade negotiations and the upcoming OPEC+ meeting. Commerce Secretary Howard Lutnick said both countries have signed a deal which included language regarding the delivery of Chinese rare earth to the U.S. The White House also announced it expected to finalize deals with 10 major trading partners in the next two weeks

OPEC+ is holding a meeting on July 6^th to discuss production quota hikes for the month of August. The alliance is set to consider another large production hike following increases of 411 MBbl/d for the past three months. OPEC+’s decision will influence a global balance that is already forecast to be oversupplied through 2026.

With markets refocusing on supply and demand fundamentals the structure of the curve has shifted into contango through 2026, reflecting the expectations of oversupply. Given these dynamics, AEGIS maintains a neutral view.

Natural gas posts weekly loss despite Friday rally

The July Henry Hub contract expired this week, making August the new prompt month. The August contract fell 19c this week to $3.75/MMbtu, despite climbing 20c on Friday. The Winter ‘25/’26 seasonal strip fell 9c to $4.64/MMbtu, but prices gained further out in the curve. Summer ’26 posted a 6c gain to finish the week at $4.16/MMbtu, while Winter ‘26/’27 also gained 6c to settle at $4.65/MMbtu.

Prices rose last week in advance of a heat wave which impacted much of the Midwest and Northeast this week, but Lower-48 average temperatures have already begun easing relative to what was seen this week. Most of the week saw forecast models lose cooling demand, but this trend reversed on Friday as the Euro Ensemble model posted the largest 24-hour CDD gain of the summer so far, according to Commodity Weather Group. This end-of-week shift is likely what propelled near-term gas prices higher. The South Central region specifically is forecasted to see extremely elevated temperatures, especially for the week starting July 6.

The EIA reported a larger than expected storage build, which further expanded the surplus to the five-year average. On Thursday, the EIA’s gas inventory report showed an increase of +96 Bcf, compared to the Bloomberg survey which showed analysts expected a +86 Bcf build. This puts the current storage surplus at +179 Bcf. Since April, nearly all storage builds have been larger than the five-year average injection, and most were the largest seen over the past five-years. Next week’s report, which will cover this current week, should be one of the first in to be smaller than average this summer.

AEGIS recommends utilizing costless collars, especially in the winter months. We remain bullish this coming winter through 2027.