WTI extends decline as Trump gives Iran talks more time
The WTI prompt-month contract fell $1.24 to $81.37/Bbl Tuesday morning (7:30 AM CT)
President Trump said he paused further strikes to give negotiations another opportunity, according to Axios
Despite growing optimism around a potential diplomatic resolution, regional tensions remain elevated after Saudi Aramco shut its 400 MBbl/d Jizan refinery on July 27 following a Houthi attack over the weekend, according to an IIR note reviewed by Reuters
The refinery has exported an average of more than 200 MBbl/d over the past three months (Kpler) and is expected to return to service by August 15
The Jizan outage could further tighten refined-product markets as Ukrainian drone attacks have also forced Russian refineries to reduce runs
Bloomberg reported tanker traffic through the Strait of Hormuz remained subdued early Tuesday, although some vessels may have crossed with their transponders disabled
“If this move lower is to be sustained, we will need to see a recovery in flows through the strait,” ING analysts said
Gas inches down as power demand falls below 50 Bcf
Natural gas is down -4.1c to $2.726/MMBtu (As of 07:30 AM CDT)
Power demand fell to 149.1 Bcf/d this morning as temperatures fell below the 10-year average (Criterion)
CDDs are expected to bottom around 13 tomorrow before trending around 15 throughout the first couple weeks of August
CWG is forecasting CDDs at 351 for the month of August, 11.3 CDDs per day, which is right at the 10-year average for the month of August
With the first week coming in hotter, upside risk could be into the mid-360s
With gas storage sitting so far above the 5-year average and Freeport expected to lose roughly 40 Bcf over a month and a half long period, Storage balances appear relatively strong heading into Winter
Permian supply surge fuels upside risk for South Central (S&P)
Permian gas production surged to 24.9 Bcf/d in July
Record breaking Permian gas production and weaker feedgas demand along the Texas Gulf Coast could further expand the South-Central storage surplus heading into this Winter
South Central storage is at a 55 Bcf deficit to last year and a 36 Bcf surplus to the five-year average for the week ending July 17
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