Oil & Gas Prices - April 13

[dan_s]

At the time of this post WTI was trading at $104.03 with heavy trading volume continuing; a classic short covering rally.

Trading Economics:
WTI crude futures climbed as much as 9.3% to above $105 per barrel on Monday morning, recouping losses from last week after President Donald Trump announced a US blockade of the Strait of Hormuz, following the collapse of weekend negotiations with Iran.
> The restrictions will apply only to vessels entering or leaving Iranian ports starting at 10 a.m. Eastern Time.
> Talks held in Pakistan failed to produce an agreement, with the US accusing Tehran of refusing to curb its nuclear ambitions, while Iran reportedly sought control of the strait, war reparations, a broader regional ceasefire (including Lebanon), and access to frozen overseas assets. < Iran knew that their "Ten Point Plan" was unacceptable to Team Trump, so they were not serious about negotiating an actual plan for peace. Zero chance of the war ending unless Iran to gives up ANY plans to enrich uranium, give up control of the Strait of Hormuz and stop funding their proxy groups like Hezbollah.
> The Strait of Hormuz has effectively remained closed since the conflict began, driving sharp gains in oil and gas prices and raising concerns about inflationary pressures and weaker global growth.
> Meanwhile, Saudi Arabia said it has restored full pumping capacity through its East-West pipeline to the Red Sea, along with output from the Manifa field.

Natural Gas
The front month NYMEX futures contract (MAY26) for HH natural gas rose to $2.71 per MMBtu on Monday morning but remained close to a seventeen-month low, as ample supply and subdued demand continued to weigh on prices.
> The EIA reported a 50 Bcf injection into storage for the week ended April 3, exceeding market expectations of a 46 Bcf build and accelerating from the previous week’s 36 Bcf increase.
> At the same time, mild weather forecasts across key US regions are keeping heating demand low, allowing utilities to continue adding gas to storage at an above-average pace for at least several more weeks.
> US natural gas prices remain largely insulated from Middle Eastern supply risks due to robust domestic production, ample storage levels, and limited short-term exposure to international trade flows.
> NYMEX strip of HH Ngas: https://www.cmegroup.com/markets/energy/natural-gas/natural-gas.quotes.html

HH gas prices should move over $3.00/MMBtu in June when natural gas for power generation ramps up. A normal summer in the U.S. and strong demand for U.S. LNG should push HH gas prices over $4.00/MMBtu by mid-November. As you can see at the link above, the DEC26 futures contract is trading at $4.35 this morning.

[dan_s]

By March 31, 2026, Europe’s gas reserves had fallen to their lowest seasonal point since 2022, with only about 27.67% of storage capacity remaining. This level was significantly lower than the five-year average. Nevertheless, despite reaching this historic low, Europe managed to get through the winter without exhausting its underground gas supplies.

Natural gas prices in Asia and Europe will remain much higher than U.S. natural gas prices because those markets are directly impacted by closure of the Strait of Hormuz and significant damage to Oman's natural gas infrastructure. Recent gas prices in Europe are over $15.00/MMBtu and over $19.00/MMBtu in Asia.

Exxon's Golden Pass export facility will soon be ramping up LNG exports.

[dan_s]

Another wild trading day for WTI: Today's price range: 97.03 - 105.63. The previous day close: 96.57

See the AI Generated oil price forecast here: https://longforecast.com/oil-price-today-forecast-2017-2018-2019-2020-2021-brent-wti#1

I think the price risk is to the upside because no one really knows who is "negotiating" for Iran or if anyone controls the military.

Watch this interview to get a better understanding of why the Strait of Hormuz is not getting back to normal anytime soon. It is also becoming clear that a large geopolitical risk premium will remain on oil prices. WTI is not going back below $70/bbl anytime soon.

Oil price volatility will remain with us for quite some time.

BTW the war in Ukraine is also not ending anytime soon.

My stock valuations are based on WTI averaging $81/bbl in 2026 and $75/bbl in 2027. Each day that passes makes me think those forecasts are looking too conservative.

I expect all of our Sweet 16 companies to report solid financial results for Q1 2026 during which WTI averaged close to $68/bbl.