Week Ending July 3

Crude prices make slight gain as market eyes OPEC+ meeting

The WTI prompt-month contract fell $0.45 on Friday to settle at $67.00/Bbl. However, crude prices settled higher on the week after last week’s big drop to $65. The market has now turned its attention to the upcoming OPEC+ meeting, trade talks, and renewed nuclear talks with Iran

According to Citigroup, OPEC+ is expected to increase supply quotas by ~400 MBbl/d in August. This would mark the fourth consecutive month of super-sized production hikes. Another large increase would bring the total number of recovered production to nearly 1.8 MMBbl/d.  The accelerated pace is likely to halt as markets soften into late 3Q, according to City analysts.

Prices declined on Friday after Axios reported that the US plans to restart nuclear talks with Iran. According to the report, the US Middle East envoy Steven Witkoff plans to meet with Iranian Foreign Minister Abbas Araghchi in Oslo next week. The geopolitical risk premium emerging from the 12-day war between Israel and Iran evaporated last week following President Trump’s announcement of a ceasefire. A restart in negotiations further reduces the already-diminished geopolitical risk premium. Negotiations may include the possibility of sanctions relief for Iran’s oil sector given Trump’s comments last week saying he supported sanction relief for Iran “if they can be peaceful.”

Elsewhere, President Trump announced the US reached a trade deal with Vietnam. The deal would be just the third announced following agreements with the UK and China. Treasury Secretary Scott Bessent said Trump will decide whether to extend talks with trading partners past next week’s July 9 deadline that would reinstitute higher tariffs on countries who do not yet have a deal in place with the US.

The market has shown signs of strength throughout the week. In the U.S., diesel is trading at its widest premium to crude in 15 months, driven by ongoing declines in distillate inventories. Front-month crude spreads are also signaling supply tightness, with Cushing stockpiles continuing to draw. However, the market may be nearing a shift toward more structural softness in the months ahead, with the continued outlook for supply dynamics to be influenced by the upcoming OPEC+ decision. AEGIS maintains a neutral view.

Natural gas finishes the week lower despite bullish storage number

The prompt Henry Hub contract settled 12c lower at $3.43/MMbtu, with this being the second consecutive weekly loss. The Winter ‘25/’26 strip lost 18c to finish the week at $4.33/MMbtu. Prices were more stable further out in the curve, while the front continued to be pressured lower by ample supply. Although this week’s storage report was the first one since April to be smaller than the five-year average, it still fell on the more bearish end of expectations.

This week, the EIA reported an injection of 55 Bcf into underground storage. This was the first injection since April to be smaller than normal, with the five-year average injection for this week of the year being 62 Bcf. So far this summer, inventories have climbed rapidly, driven by weak weather and strong production. For a more detailed look at the pace of the injection season so far, click here.  

While this week’s report saw the storage surplus contract slightly to +173 Bcf to the five-year average, our November end-of-season estimate remains near the top of the five-year range at 4.0 Tcf. If this forecast pans out and inventories are looking to start winter at an elevated level, it could push prices lower for this fall and winter. November 2025 Henry Hub is trading around $3.90/MMbtu, which could be too rich if storage is as full as some anticipate.

Even if fundamentals may look looser for the start of winter, dynamics are expected to shift rapidly as new LNG demand quickly tightens the supply-demand balance. Signs of this coming jump in demand can be seen already, with Corpus Christi LNG hitting a new record this week as the Stage 3 expansion ramps up, and Golden Pass indicating they will receive an LNG cargo soon to begin the cooldown of the facility.

AEGIS holds a neutral view on near-term prices, and a bullish view on Winter ‘25/’26 and beyond. Call-put skew remains elevated across these tenors, potentially making costless collars more attractive to producers.