Market Insights > First Look

First Look - Crude gains as China signals openness to US trade talks

WTI climbs on renewed trade optimism
- The WTI prompt-month contract rose 72c to $62.05/Bbl on Wednesday morning (7:45 AM CT), supported by signals that China is open to resuming trade talks with the US
- Beijing outlined conditions including respectful dialogue and a designated negotiator backed by the US president
Iraq to cut oil exports under OPEC+ pressure
- Iraq, OPEC’s second-largest producer, plans to reduce crude exports by 70 MBbl/d in April, targeting an average of 3.23 MMBbl/d
- The IEA estimates Iraq’s output exceeded its quota by over 300 MBbl/d last month
  - OPEC data shows production was 90 MBbl/d above target in March
US weighs land offensive against Houthis
- The US is in discussions with Yemeni forces and Gulf allies over a potential land campaign aimed at removing the Houthis from strategic areas along the Red Sea coast

Natural gas trades down 6c as prices continue to trend lower
- The May Henry Hub contract has lost about 22c so far this week, with prices trading around $3.28/MMbtu this morning
- Temperatures are expected to be slightly warmer than the ten-year average over the next two weeks
  - Average to mild weather should result in very limited demand over the next two weeks, resulting in larger storage builds
- LNG feedgas demand remains down from recent highs of 17.5 Bcf/d, as various maintenance events are limiting flows to about 16.3 Bcf/d
- A report from The Oxford Institute said that despite an increase in global LNG supply in Q1 2025, the market remains tight as Europe and Asia look to refill storage
Midcontinent producers see $3.80/MMbtu needed for profitability (NGI)
- A survey of energy producers by the Federal Reserve Bank of Kansas City showed that producers believe they need a natural gas price of $3.80/MMbtu to be profitable
- “District drilling and business activity grew modestly for the first time since the fourth quarter of 2022 as oil and gas prices showed strength in the first quarter,” according to a Fed economist
- The survey found that most firms expect recent policy changes to increase costs over the next year, but demand expectations are mixed