WTI edges up post OPEC output hike and possible US sanctions on Russia; NYMEX NG rallies to one-month high
The prompt WTI contract settled $0.39, or 0.63% higher at $62.26 USD/bbl yesterday. The curve is heading higher again this morning with futures for Oct25 are currently trading +$0.93 at $63.19 USD/bbl.
Trans Mountain expects dredging at the port in Vancouver to be completed in late 2026 or early 2027, a project that will allow ships to load more oil. According to Trans Mountain's Chief Administrative Officer, Jennifer Pierce, Aframax tankers can currently only leave the dock 70% full due to draft restrictions. Once the dredging is finished, “an Aframax will be able to leave the dock 100% full”. While these tankers typically carry up to 800,000 barrels, they are currently limited to loading around 550,000 barrels at the Westridge Marine Terminal. WCS differential narrowed to its tightest level in a month, sitting at -$11.56 USD/bbl as of yesterday [Link]
Following Russia's most intense aerial bombardment of Ukraine since the war began, President Trump has threatened a new phase of sanctions against Moscow. According to Ukraine, the attack involved at least 810 drones and 13 missiles over the past weekend, leading to growing calls for a stronger Western response against President Putin. While Trump has previously threatened further sanctions, he withheld them as he pursued peace talks. However, his latest comments suggest a more aggressive posture and he stopped short of committing to the decision or specifying what a "second phase" of sanctions would be [Link]
On the other side, Kremlin states that sanctions will never force Russia to change its course. President Putin says the Russian economy has grown faster than those of G7 countries, defying Western predictions of a crash, thanks in large part to military spending. Putin has ordered businesses and officials to defy sanctions in every way possible. Kremlin Deputy Chief of Staff, Peskov, stating that "no sanctions will be able to force the Russian Federation to change the consistent position that our president has repeatedly spoken out." [Link]
The prompt NYMEX NG contract edged up by $0.042 or 1.38%, to settle at $3.09 USD/MMBtu yesterday, which is the highest in a month. NYMEX NG Futures for Oct25 are currently trading +$0.02 at $3.111 USD/MMBtu.
Gas prices are on the rise to start the week, despite US LNG feedgas deliveries declining falling to the lowest in 3 weeks at 14.6 bcf/d as of this morning. While feedgas deliveries for exporting remains low, gas production has fallen to its lowest level since early July, dipping to just above 107 bcf/d. This tighter supply is being met with a forecast for stronger demand; according to the NOAA forecast, much of the central and western US is expected to trend warmer than normal through mid-September, supporting the prices.
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