Week Ending May 23

Crude slips as geopolitical flare-ups meet persistent supply pressure

WTI prompt-month futures fell $0.96 over the week to settle at $61.53/Bbl on Friday, as the market navigated rising geopolitical tensions and an increasingly heavy supply outlook driven by OPEC+.

Geopolitical risk reemerged after CNN reported that Israel is preparing to strike Iran’s nuclear facilities. Iran vowed to retaliate and warned it would hold the U.S. accountable for any Israeli action. Despite the escalation, U.S.–Iran nuclear negotiations proceeded in Rome. Tehran emphasized urgency ahead of the talks, reaffirming its right to continue low-level uranium enrichment, while President Trump suggested that sanctions relief could be part of a potential agreement, potentially unlocking 200–300 MBbl/d of Iranian production.

Meanwhile, OPEC+ continued to pressure the supply side. The group is weighing a third consecutive monthly output hike of 411 MBbl/d in July, roughly triple the original pace of 138 MBbl/d per month. Though positioned as a penalty for quota noncompliance, the cumulative effect is eroding the fragile supply-demand balance. A final decision is expected at the June 1 ministerial meeting, and many analysts expect another increase despite supply glut concerns.

Elsewhere, the U.S. announced plans to let a key Venezuela oil license expire next week, potentially disrupting Chevron’s operations. While the move could reduce some volumes, the impact is expected to be modest in the face of rising OPEC+ production and a potential return of Iranian barrels.

This week’s market action underscores the fragility of crude pricing in an environment where upside geopolitical shocks are quickly outweighed by structural oversupply risks. The WTI curve remains in backwardation through the end of 2025 but begins to flatten into early 2026, reflecting inventory concerns and the looming return of sanctioned supply. Barring a major disruption, AEGIS maintains a neutral-to-bearish outlook.

Natural gas finishes the week unchanged, despite intraweek volatility

The prompt Henry Hub contract finished the week flat at $3.34/MMbtu, bringing total losses over the past two weeks to -50c. Meanwhile the later parts of the curve were stronger, with Summer ’26 and Winter ‘26/’27 both up 6c to $4.16/MMbtu and $4.57/MMbtu. While the June contract was unchanged, it did see a 40c swing during the week.

Last week saw continuous selling pressure in the front of the curve, with prices settling lower for six consecutive days. There was a sharp rebound on Monday of more than 30c, but prices resumed their downward trend afterwards. Near-term demand forecasts have been driving price action lately, with temperatures not having been supportive of higher gas consumption lately. While Lower-48 average temperatures should begin to increase soon, supporting higher power burn, the last few weeks of weak demand have resulted in a series of large storage builds.

The trend of above-average storage injections continued with this week’s EIA report showing a 120 Bcf build. Since March, when the storage deficit peaked at more than -200 Bcf, inventories have climbed back above the five-year average. An additional 328 Bcf more than the five-year average injection rate has entered storage, putting inventories at a +90 Bcf surplus to the five-year average. This storage increase has resulted in our November end-of-season estimate moving higher.

AEGIS recommends hedging with swaps for near-term contracts, costless collars for Winter ‘25/’26, and either swaps or tight collars for Summer ’26.