Energy Prospectus

Trading Economics

WTI Oil
WTI crude oil futures edged up to $70.80 per barrel on Monday afternoon, after a 2.8% loss on Friday, but remained near yearly lows as investors focused on Ukraine peace talks and the potential resumption of crude exports from northern Iraq.
> EU leaders will hold an emergency summit on March 6 to discuss further support for Ukraine, while Ukrainian President Zelenskiy signaled willingness to step down if it brings peace. Meanwhile, US President Trump has started direct talks with Russia, excluding Ukraine and the EU, with further discussions expected this week. < This is not going to happen quickly. First a cease fire needs to be negotiated. Then it needs to hold for a few months before even hope of a lasting peace can be achieved.
> An end to the war may not boost Russian supply due to OPEC+ production limits, but could still push prices lower.
> Elsewhere, Iraq could add 185,000 barrels per day through the Iraq-Turkey pipeline once operations resume.
> No mention today of sanctions against Iran.

HH Natural Gas
US natural gas futures (MAR25) moved back to $4.00 as the contracts expiration date nears, retreating from a 25-month high reached last week, as forecasts for milder weather and stabilizing production eased supply concerns.
> Freeze-offs, which disrupt output during extreme cold, are beginning to subside, supporting a recovery in production.
> Last week, prices surged nearly 14% as an Arctic blast increased heating demand while freezing oil and gas wells, reducing supply.
> Meanwhile, gas flows to LNG export plants remain strong, averaging a record 15.5 bcfd in February, up from 14.6 bcfd in January.
MY TAKE: EIA will report the largest weekly draw in February (forecast is 272 Bcf) since 2021 on Thursday for the week ending February 21st. It will push gas in storage to near 250 Bcf below the 5-year average. By mid-March the deficit to the 5-year average will be near 330 Bcf and LNG exports are growing each week. Today's pullback is just the Paper Traders that have to close out their long positions before the MAR25 contract expires in a few days.

(Reuters) -Oil prices settled higher on Monday as fresh U.S. sanctions on Iran and a commitment to compensate for overproduction by Iraq added to concerns of near-term supply tightness, helping the market recover some of Friday's steep losses.

Brent crude futures settled up 35 cents, or 0.5%, at $74.78 a barrel. U.S. West Texas Intermediate crude futures gained 30 cents, or 0.4%, to $70.70.

On Friday Brent notched its lowest close since February 6 while WTI had its lowest settlement so far this year.

On Monday, the U.S. Treasury imposed a fresh round of sanctions targeting Iran's oil industry, hitting brokers, tanker operators, and shippers who sell and transport Iranian petroleum.

That might have had a modest impact on oil prices, along with the Iraqi oil ministry's reaffirmation of its commitment to the OPEC+ group's supply agreement, UBS analyst Giovanni Staunovo said.

He cautioned, however, that Iranian crude oil exports remain elevated. "Time will tell if (the sanctions) impact exports," he said.

Iraq said it would present an updated plan to compensate for any overproduction of its OPEC+ quotas in recent months. Iraq on Sunday said it will export 185,000 barrels per day from Kurdistan's oilfields through the Iraq-Turkey pipeline once oil shipments resume.

Oil prices were bound to recover from the prior session's steep selloff, when expectations of the resumption in northern Iraqi exports and of an end to the war in Ukraine pulled benchmarks more than $2 lower, Commodity Context analyst Rory Johnston said.

The market structure has also flashed signs of near-term supply tightness, he added. The premium of front-month Brent futures over the next month's contract was at its highest on Monday since February 11, having climbed steadily over the past week.

Others cautioned oil prices could stay under pressure from talks to end the Ukraine war, which could pave the way for more Russian oil onto the market, and a slew of U.S. tariff measures, which could weigh on economic activity and crude oil demand.

U.S. President Donald Trump said on Monday the U.S. is close to a minerals deal with Ukraine as he and French President Emmanuel Macron held talks that covered prospects for ending the Ukraine war despite stark differences on how to proceed.

Trump said Washington is 'on time' with tariffs against Canada and Mexico, responding to a question about the deadline ending a previous pause on such action which expires next week.

"We're just clearing out room to trade lower and I would be cautious if I was a buyer in the market today," Mizuho analyst Robert Yawger said.

"Just sitting here, waiting for the next big event to happen, and obviously there are plenty of big ones out there that could hit any moment."