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First Look - Natural gas dips as June contract nears expiry

Oil rises as market weighs OPEC+ supply outlook and Russia sanctions risk
- Oil prices recovered as traders balanced expectations for more OPEC+ supply with the potential for new US sanctions on Russia
- WTI prompt-month contract rose $0.71 to $61.60/Bbl Wednesday morning (7:45 AM CT)
OPEC+ meets for quota review and July output talks
- OPEC+ will hold an online meeting Wednesday to review 2025–2026 production quotas, with no major changes expected
- A second meeting on Saturday will determine July output levels
  - The group is just over halfway through restoring roughly 2.2 MMBbl/d of output halted since 2023; if the current pace continues, the process would be completed by October
China announces commodities market reforms (Bloomberg)
- Shanghai Futures Exchange proposes allowing foreign investors to post foreign exchange collateral for yuan-based contracts
- Plan includes reforms across 18 domestic futures contracts, including crude oil and petrochemicals
- The move aims to systematically internationalize China’s commodities trading and expand global access

Natural gas is slightly lower, reversing some gains from yesterday
- The June NYMEX Henry Hub contract will expire today, making July the new prompt month contract
- Weather-driven demand should steadily increase from seasonal lows over the next two weeks, as Lower-48 average temperatures rise toward 75ºF
- Maintenance continues to limit LNG export flows, with feedgas declining to 15 Bcf/d
Higher gas prices may be needed to incentivize production (NGI)
- Natural gas production is in a narrow range and down from 2024 peak levels, with E&P companies in maintenance mode, waiting for increased prices to grow output
- So far in 2025, production has averaged about 105 Bcf/d, although at times reaching as high as 107 Bcf/d
- As demand grows, primarily from LNG exports, supply will need to rise or the market could be significantly undersupplied