Crude poised for weekly gain as Middle East conflict escalates
The WTI front-month contract fell $0.95 to $90.35/Bbl Friday morning (7:30 AM CT)
The US and Iran have intensified their exchange of military strikes in recent days as the Trump administration struggles to bring the six-month conflict to an end
Republican Representative Pat Harrigan said that “very clearly militarily, we are stalled”
“An elevated georisk premium remains as long as US and Iran continues to attack each other, reducing the chance of a much needed full scale reopening,” said Ole Sloth Hansen of Saxo Bank
Hansen attributed Friday’s pullback to profit-taking following the recent rally
US Energy Secretary Chris Wright told reporters that tankers carrying 17 MMBbl of oil transited the Strait of Hormuz earlier this week, though the latest military escalation threatens to reduce Persian Gulf loadings
While the front of the curve moved lower Friday, the Cal 2027 and Cal 2028 strips rose to $73.35/Bbl and $68.77/Bbl, respectively
Gas gains on forecasts of record-breaking September heat
Natural gas is up 5.7c to $2.97/MMBtu (As of 07:30 AM CDT)
Average L48 temperatures will briefly touch the 10 year normal this weekend, before shooting back up near 80°F in next week’s heat wave
This heat is translating to some elevated power demand, with CDDs now forecast to be above 10 most days of the forecast period (Criterion)
Atlantic undergoing extremely calm hurricane season, but pacific is active
The Atlantic Basin ACE, a measurement of energy created by cyclones, is sitting at a meager 9% of normal (NASA)
Pacific Basin ACE is much higher, running 50% above normal due to active systems, however this doesn’t influence L48 gas demand
The lack of Atlantic Hurricanes has allowed for continued LNG operations and Gulf coast power demand this year
These weather anomalies are related to the historic El Nino
EIA reports a 30 Bcf injection, largest build in 3 weeks
Elevated August and September heat is contributing to downward revisions in the exit rate, with consensus now being closer to 3.9 Tcf, down from 4.03 a couple weeks ago
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