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First Look - Oil steadies on wildfire relief; gas slides as weather cools

Oil holds steady after two-day rally
- Crude prices stabilized following gains earlier in the week, as rainfall helped slow the spread of wildfires in Canada that had previously disrupted production
- WTI prompt-month futures were down $0.36 at $63.05/Bbl as of 7:45 AM CT Wednesday
- The American Petroleum Institute (API) reported a 3.28 MMBbl draw in U.S. crude inventories last week, potentially the largest weekly decline since March if confirmed by EIA data
WTI spreads firm as Canadian supply disruption tightens near-term market (Bloomberg)
- The WTI prompt spread (July vs. August) surged to $1.20/Bbl on Monday, the widest premium since January
  - The widening spread indicates stronger immediate demand relative to supply
- Nearly 350 MBbl/d of Canadian oil production remains offline, threatening flows to Cushing, OK, and U.S. Gulf Coast export terminals
China receives rare LPG cargo from Norway amid shifting trade flows (Kpler)
- The VLGC Flanders Pioneer, loaded at Norway’s Karsto terminal on May 29, is en route to Ningbo, marking China’s first LPG cargo from Norway since 2019
- The rare flow may reflect a shift in sourcing strategies by Chinese importers amid trade disruptions and tariffs affecting US-to-China LPG shipments

Natural gas trades lower as weather forecasts cool
- The July Henry Hub contract is down about 3c this morning, after gaining about 3c yesterday (8:20 AM CT)
- Two-week forecasts for Lower-48 average temperatures shifted colder for nearly every region, resulting in an estimated demand loss
- Production is down for a third day to 104.5 Bcf/d, compared to May’s average of 106.16 Bcf/d
  - Maintenance in the Rockies is driving today’s drop
AI power demand increasing usage of less efficient gas turbines (Bloomberg)
- Stargate’s first data center, planned for next year, will be powered by single cycle natural gas turbines, which are significantly less efficient than newer combined cycle turbines
- The long wait time for new gas turbines has forced developers to seek alternatives such as these single cycle
- These single cycle turbines consume more gas per megawatt produced, compared to more efficient combined cycle turbines
LNG developer Delfin seeking investors for US export project (Bloomberg)
- Delfin Midstream is looking to fund a plan to export LNG from a floating liquefaction plant off the coast of Louisiana
- The company received a license for a deepwater port from the Transportation department earlier this year
- The project is still in the very early phases with Delfin possibly exploring the sale of equity and debt to help fund the project