Crude slide extends as traffic through Hormuz continues to recover
The WTI prompt-month contract fell $2.16 to $71.05/Bbl on Wednesday morning (7:30 AM CT)
Bloomberg reports that more ships are traversing the Strait of Hormuz as the International Maritime Organization has received security assurances that could facilitate the movement of vessels, potentially allowing hundreds of ships currently delayed in the Persian Gulf to resume transit
Brent's prompt time spread has moved into a shallow contango, with the front-month contract trading below the second-month contract
That market structure is typically associated with expectations of ample near-term supply
Despite the sharp decline in crude prices, Neil Crosby of Sparta Commodities cautioned that it may be premature to call a market bottom as Middle East supply continues to return
“The market sees for now accelerating Hormuz transits, meaning supply of physical oil is spiking into a subdued global demand picture, whilst macro fears are also mounting this week,” add Crosby
The decline in sentiment is also evident further along the curve, with the Bal 2026 strip falling below $70/Bbl after trading above $90/Bbl at the height of the conflict risk premium
The Cal 2027 strip traded near $67/Bbl Wednesday morning, down roughly $10/Bbl from its peak near $77/Bbl in May
Natural gas trades slightly higher on marginal demand gain
Lower-48 population-weighted temperatures are forecast to rise above the ten-year average next week, and remain elevated into the start of July
Today’s weather model changes show a warmer Northeast and Midwest compared to yesterday, but a cooler South Central
Gas flows into Golden Pass LNG recently reached a new high of nearly 600 MMcf/d, with Train 1 having a total capacity of 790 MMcf/d
Transco launches open season for Leidy expansion
Transco has opened a binding open season for the proposed 175 MMcf/d Leidy Access Expansion in the Zone 6 area
The goal of the project is to relieve constraints on gas heading east from northeast Pennsylvania to demand centers in New Jersey, Maryland, and Pennsylvania
This should be supportive of Leidy basis prices
An in-service date for the project has not yet been announced
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