The WTI front-month contract fell $3.34 to $99.14/Bbl Friday morning (7:30 AM CT)
Fighting has intensified across the Middle East over the past two weeks, with US strikes targeting Iranian oil tankers
The UK Maritime Trade Operations received a report that two vessels were struck by unidentified projectiles off the coast of Oman
Yemen’s Houthis have attacked Saudi energy facilities, forcing operations to halt, while advancing toward coastal areas bordering the Bab el-Mandeb Strait
The advance could allow the group to extend its disruptive capabilities toward the narrowest section of the waterway
“A resumption of a full-blown Saudi-Houthi war would be a potential catalyst for our high oil price scenario coming to fruition,” Helima Croft of RBC Capital Markets said
The International Energy Agency lowered its oil demand forecast for this year and warned that consumption could weaken further in the coming months as the Iran war continues
The agency now expects global oil demand to decline by 2.5 MMBbl/d this year, marking the largest annual average contraction since the 2020 Covid pandemic
The IEA also reduced its global supply outlook by 1.3 MMBbl/d and now projects an annual decline of 5.7 MMBbl/d, while pushing its expected recovery into next year
Gas drops as power demand falls
Natural gas is down -5.5c to $2.779/MMBtu (As of 07:30 AM CDT)
Power demand fell back below 50 Bcf/d all the way to 46.8 Bcf/d
L48 average temperatures are at 76°F today, and are expected to drop consistently over the next two weeks to below 70°F by the end of the forecast period (Criterion)
Barring any late September/ early October heat wave, power demand should steadily decline with the temperatures, making any more 50+ Bcf/d days of power demand unlikely for the remainder of the year
The EIA reported a weekly build of 40 Bcf for the week ending 9/4
This build was above median expectations of 34 Bcf as reported by Bloomberg
Inventories are currently at a surplus of 148 Bcf to the five-year average, and below average heat in late September could increase this surplus further
Get market insights delivered to your Inbox every day!
