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First Look - Early crude rally fades on renewed OPEC+ supply risk

Oil slips as OPEC+ hike chatter outweighs trade court ruling
- Crude prices initially rose with equities after a U.S. trade court ruled many of President Trump’s global tariffs illegal, including those on top crude importer China
- Gains reversed after Kazakhstan’s Deputy Energy Minister said OPEC+ is likely to announce another output increase for July at Saturday’s meeting
- WTI prompt-month futures fell $0.32 to $61.57/Bbl Thursday morning (8:05 AM CT)
- Oil has been trending lower since mid-January as revived OPEC+ supply and tariff fallout weigh on sentiment
OPEC+ production boost may fall short
- While OPEC+ plans to add 1.37 MMBbl/d by July, output gains could be closer to 972 MBbl/d
- Supply growth is likely to be limited by underperformance and compensation pledges from countries like Kazakhstan and Iraq
Kazakhstan says it cannot cut output (Bloomberg)
- Energy Minister stated Kazakhstan is unable to reduce oil production and aims to increase volumes beyond current plans later this year
- Over 70% of Kazakhstan’s production is operated by foreign companies

Natural gas is slightly lower, with July now the prompt contract
- Lower-48 average temperatures have been below normal for the past week, but forecasts show them rising toward the ten-year average by early next week
  - This should support power sector gas demand, which has been below last year’s levels in recent weeks
- The EIA will release its weekly natural gas storage report this morning, with a median expectation of a 100 Bcf injection, according to the Bloomberg survey
  - This could be the fifth consecutive 100+ Bcf storage build, with the prior five injections coming in well above average
Canada’s Woodfibre LNG advances construction (S&P)
- The Woodfibre LNG project site has received the first large-scale modular components, as construction advances
- Woodfibre will be Canadas second LNG export plant, after the startup of LNG Canada later this year
- This project will be relatively small, at about 0.32 Bcf/d of liquefaction capacity, while LNG Canada is much larger at 1.8 Bcf/d
- The buildout of LNG exports in Canada could potentially reduce exports of Canadian gas into the US