Crude eases as tentative US-Iran agreement reduces immediate supply concerns
The WTI prompt-month contract fell $1.16 to $87.74/Bbl on Friday morning (7:30 AM CT)
Axios reports the US and Iran have reached a preliminary framework that would extend the current ceasefire for 60 days while negotiations continue over Tehran’s nuclear program
Uncertainty remains around the agreement, however, as President Trump has not formally approved the proposal and Iranian officials have indicated the final text is still being negotiated
The prospect of continued negotiations has helped ease some of the geopolitical risk premium that had been supporting crude prices in recent weeks
According to Morgan Stanley, countries within the International Energy Agency have implemented roughly 150 MMBbls of their planned 400–426 MMBbl emergency stockpile release
The releases have averaged approximately 2.5 MMBbl/d since April
Domestically, inventories at Cushing, Oklahoma declined by another 2.8 MMBbls last week, marking the largest weekly draw at the delivery hub since August 2023
This bring stocks closer to the roughly 20 MMBbl level often viewed as the minimum operating threshold for the facility
Natural gas climbs as weather forecast range continues to warm
Natural gas is up 8.0c to $3.365/MMBtu (As of 07:30 AM CDT)
L48 average temperatures will decline mildly this weekend before steadily climbing to the mid-70s by mid-June (Criterion)
The EIA reported a 92 Bcf build for the week ending May 21, inventories are now at a surplus of 144 Bcf to the five-year average
Last year, inventories were also at the high end of the five-year average, especially by the end of injection season in October
The YOY storage excess is subdued to just 21 Bcf due to last year recording a record pace of 100+ Bcf injections persisting into June (S&P)
Due to the mild shoulder season, Summer temperatures will likely have to be at or near their 10-year highs to bring storage levels back down to average heading into Winter
Mexican exports hit YTD high on high cooling demand
Over the last 10 days, South Texas sent 5.11 bcf/d across the border. West Texas sent 2.11 Bcf/d and California and Arizona combined sent 0.7 Bcf/d of natural gas into Mexico as total exports reached 8.25 Bcf/d (NGI)
Record exports to Mexico could play a role in siphoning away further storage build in the L48 this Summer
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