Week Ending March 28

WTI tops $70/Bbl before settling lower; logs third straight weekly gain

The WTI prompt-month contract settled at $69.36/Bbl on Friday, down 56c on the day, but briefly surpassed $70/Bbl for the first time since the beginning of March. This marked the third consecutive weekly gain for crude. One of the primary drivers of this week’s price was bullish inventory data. The American Petroleum Institute reported a 4.6 MMBbls draw in US crude stocks, which was later supported by EIA data showing a 3.3 MMBbls decline.

Geopolitical tensions also fueled volatility, as the Trump administration announced a 25% tariff on auto imports and proposed new fees targeting Chinese-built ships, a measure aimed at curbing China’s growing dominance in global shipbuilding and consistent with Trump’s escalating stance toward China. Both the enacted and proposed tariffs added another layer of uncertainty to global trade flows, with markets concerned the potential trade war could dampen global economic growth. In a related development, the administration proposed a 25% “secondary” tariff on countries importing Venezuelan crude and gas, largely targeting China and India’s purchases. In response, Venezuela ramped up exports to China to 400 MBbls, the highest monthly volume since 2023.

Meanwhile, a Black Sea ceasefire agreement between Russia and Ukraine ensured safe passage for commercial shipping, easing near-term risks to energy logistics in the region. The agreement signals potential progress toward a broader, long-term ceasefire.

Looking ahead, the oil market continues to navigate uncertainty around President Trump’s upcoming reciprocal tariffs, while OPEC remains in the background, preparing to bring supply back online next month. Despite WTI trending closer to $70/Bbl, AEGIS maintains a neutral view on prices, citing limited upside in the near term.

Natural gas prices post weekly gain, after two weeks of losses

The April Henry Hub contract expired this week at $3.95/MMbtu, making May the new prompt contract. Winter ‘25/’26 lost 5c to finish the week at $4.94/MMbtu, while Summer ’26 gained 5c at $4.14/MMbtu. The EIA reported another storage build, while natural gas power demand could skew to the downside this summer.

The EIA reported an injection of 37 Bcf, bringing total US inventories to 1,744 Bcf. The injection season started earlier than usual this year, driven by warmer-than-average weather in March. This has resulted in the deficit to the five-year average shrinking to -122 Bcf. With the next two weeks of weather and the ten-year average weather beyond that, our modeling indicates that storage levels could rise to the five-year average by the end of May, potentially concluding the injection season above average.

Higher gas prices could lead to a reduction in power sector gas demand this summer. Typically, as gas prices rise, power generators consume less gas relative to coal. Our estimates, given current summer prices and assuming normal weather, show that gas power demand could be materially lower if prices remain elevated. This would result in larger storage injections and contribute to our projection of gas inventories.

AEGIS recommends clients use swaps for the nearby contract months, while collars may be preferable in Winter. Summer ’26 and Summer ’27 remain in call skew, which may make collars preferable for these periods as well.