Crude breaks above $104/Bbl as Saudi supply risks intensify
The WTI front-month contract rose $4.09 to $104.14/Bbl Monday morning (7:30 AM CT)
Saudi Arabia said it halted operations on its 7 MMBbl/d East-West pipeline as a precaution following recent attacks, with no indication of when flows will resume
The timing of a restart could emerge as a key driver of prices this week, as the pipeline provides one of Saudi Arabia’s most important alternatives to shipping crude through the Strait of Hormuz
Inventories at Yanbu could sustain exports for five to seven days, but a longer outage would cause a “huge disruption,” said Suvro Sarkar of DBS Bank
Sarkar added that without greater clarity on repairs, the near-term outlook points toward a potential test of $120/Bbl
US Energy Secretary Chris Wright cautioned traders against expecting an imminent breakthrough on Hormuz as Iran prepares to propose a new transit agreement to other Gulf countries
“Counting on a consensual agreement with Iran today is certainly not a good bet,” Wright said
Gas is up as weekend forecast changes shift prices higher
Natural gas is up 7.3c to $2.904/MMBtu. (As of 07:45 AM CDT)
The L48 warmed up over the forecast period considerably over the weekend, gaining 13.2°F of heat cumulatively across the range
The warming was centered east of the Rockies, primarily in the Midwest (Criterion)
This doesn’t change the overall pattern of cooling into the shoulder season over the remainder of September
Power demand fell day over day 2.1 Bcf/d to 44.7 Bcf/d
LNG feedgas ticks higher, approaches 20 Bcf/d again
Improvements across the gulf fleet have been leading feedgas demand steadily higher
Commissioning at Golden Pass remains choppy, potentially a negative sign for future Golden Pass trains ramp up schedule
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