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First Look - Oil extends rally as Israel vows retaliation | UAE says OPEC has successfully balanced the crude market

Oil prices extend gains as Israel vows retaliation
- WTI prices are up more than $2 to $72/Bbl, extending gains from yesterday (As of 8:20 AM)
- Israel has said they will respond after yesterday’s Iranian attack on Israel in which more than 200 ballistic missiles were launched
Asian refiners confident Middle East conflict will not disrupt crude flows (S&P)
- Asian refiners are confident trade flows between the Persian Gulf and Asia will stay stable despite the Iran-Israel conflict due to East Asia's neutral stance
- Iran has threatened to attack Middle East energy infrastructure if the US or its allies engage militarily, but it is unlikely to disrupt crude supplies to Asia
- China, despite declining Saudi imports, relies on the Middle East for 54% of its crude; Japan imports 96% of its crude from Persian Gulf suppliers
UAE says OPEC has successfully balanced the crude market (S&P)
- The UAE acknowledges the group's role in preventing market imbalances and expressed support for OPEC+ policies, which have stabilized supply
- OPEC+ has implemented several rounds of production cuts, including a voluntary reduction of 2.2 MMBbl/d by eight countries
- OPEC’s plan to gradually return supply is expected to lead to oversupplied conditions in 2025
- The OPEC+ Joint Ministerial Monitoring Committee is set to meet to assess compliance with quotas and review market outlooks

Gas trades higher in early trading Wednesday as weather forecasts indicated colder conditions for next week
- Prompt gas was 9.3c higher to $2.989/MMBtu (As of 7:45 AM)
- Winter ‘24/’25 strip is up 5.6c to $3.317, and the Summer ’25 strip is up 2.5c to $3.248
- Today's European Ensemble shifted colder across all regions, with average temps dropping by -11.8 F, mainly in the Northeast, Rockies, and West, while the overall Lower 48 pattern remained unchanged from previous runs (Criterion)
US FERC allows Williams’ LEG project to advance without commission review (S&P Global)
- FERC rejected Energy Transfer’s challenge, allowing Williams' 1.8 Bcf/d Louisiana Energy Gateway (LEG) pipeline to proceed without needing FERC certification as it is classified as a non-jurisdictional gathering line
- Energy Transfer argued the project resembled a transmission pipeline requiring FERC oversight, but FERC ruled that LEG's design and functionality aligned with gathering criteria, removing regulatory hurdles.
- Williams plans for the pipeline to gather natural gas from the Haynesville basin to serve Gulf Coast markets, with in-service targeted for 2H 2025
- The decision clears a major obstacle for Williams, who has faced multiple legal challenges from Energy Transfer, including a Louisiana state court ruling in June permitting LEG to cross Energy Transfer’s facilities