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First Look - Oil falls as US trade talks develop; natural gas weighed by cool forecasts

Oil down as US trade talks progress
- The WTI prompt-month contract fell $0.24 to $65.07/Bbl Wednesday morning (7:45 AM CT)
- President Trump said the US has reached a trade deal with Japan setting the tariff rate on imported good from Japan at 15%
  - Trump also said the US will impose a 19% tariff on Philippine goods, a slight reduction from the previous rate of 20%
- US Treasury Secretary Bessent said further trade talks will take place with China next week in Stockholm
  - Bessent said the countries could potentially discuss Beijing’s purchases of sanctioned barrels from Russia and Iran
- The American Petroleum Institute reported a 577 MBbl draw in the week ended July 18
  - Official data from the EIA is due later Wednesday amid expectations that crude inventories will fall 1.4 MMBbls according to Bloomberg
Halliburton to retire oilfield equipment (Bloomberg)
- In response to deteriorating demand among shale companies Halliburton is idling some oilfield equipment
- CEO Jeff Miller says the company is forecasting shrinking margins as weakening demand weighs on the prices they can charge
- The fracking division sees its margins narrowing by 150 to 200 basis points in Q3

Natural gas trades lower for a third day
- The August Henry Hub contract continues to fall, as hot weather fails to materialize this summer
  - Prompt prices are down about 35c from Friday
  - Weather forecasts show below average temperatures for the first week of August, which should result in weaker gas demand
- Gas production is slightly higher today, at 106.25 Bcf/d, but still down from the weekend high of 107.24 Bcf/d, according to data from S&P
- Pipeline nominations show 4 MMcf/d flowing into the Golden Pass LNG terminal (4Q 25 startup), but this could be revised down to zero as seen last week
US to form joint venture with Japan for Alaska LNG (BBG)
- President Trump announced that the US and Japan are close to a deal to jointly construct an LNG export terminal in Alaska
- The project has been proposed previously, but did not gain much traction due to the high costs associated with it
  - Unlike Gulf Coast projects, which are located near existing infrastructure, Alaska LNG would require an 800-mile pipeline across the state
- Glenfarne Group, the developer of the project, said the support is accelerating the company’s engagement