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First Look - Oil recovers after two-day drop; gas slips as weather-driven demand wanes

June 25, 2025 | Narciso Cano

Crude edges higher following steep selloff
- WTI prompt-month futures rose $0.46 to $64.83/Bbl Wednesday morning (7:45 AM CT), rebounding slightly after a two-day decline
- Market risk premiums eased after a ceasefire took hold and President Trump signaled openness to Iranian oil exports
  - Trump stated on social media that China may continue purchasing Iranian crude, potentially weakening U.S. sanctions and sending a diplomatic signal amid trade talks with Beijing
  - While the move could reduce legal risks for Chinese buyers, its effect on actual oil flows remains unclear.
- OPEC+ is expected to discuss a possible supply increase in August
- The API reported a 4.3 MMBbl draw in U.S. crude inventories last week
- Iran’s Foreign Ministry confirmed significant damage to nuclear sites from recent U.S. airstrikes, according to the Associated Press
- The WTI forward curve remains in deep backwardation through early 2026, before shifting into mild contango through 2030

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Natural gas is trading slightly lower, as prices continue to move down
- Gas production remains around 105.6 Bcf/d, with output mostly unchanged over the past few months
- LNG feedgas demand moved higher again today, with inflows to US export plants reaching 15.5 Bcf/d, as maintenance concludes at Sabine Pass LNG
Heatwave impacting the Northeast to ease
- Temperatures across the Midwest and Northeast soared in recent days, leading to a jump in power demand and forcing grid operators to issue emergency alerts
- Lower-48 population weighted average temperatures reached more than 80ºF, but are forecast to fall to the ten-year average over the next few days
- Higher natural gas power demand should lead to a below average storage build, to be reported next week

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