Negotiations Advancing

Wednesday, May 27, 2026. CRUDE OIL: WTI closed $92.51, down from open $93.88-$93.90. Day range $89.41-$93.90. Pulled back from earlier May highs near $107-$108 on profit-taking, inventory data, holiday caution. Futures curve steep backwardation: distant 2026 contracts $30-40 below near-term, signaling expected short-term tightness followed by relief as production recovers. EIA outlook: Global inventories falling sharply Q2 2026, supporting Brent ~$106/bbl May-June before easing later in year. WTI typically trades at discount to Brent. Analyst forecasts: S&P Global raised assumptions to ~$95 WTI; J.P. Morgan and others see $80-100 range (some revised higher from earlier bearish views); longer-term expectations trend lower toward $70-80. KEY LEVELS: Support $90, Resistance $95, above that $100. SETUP: If break below $90, target $85. If hold $90 and get deal announcement, expect bounce toward $95-$98. NATURAL GAS: Henry Hub trading $2.95-$3.02, June contract near $3.00. April monthly average $2.77, early May weeks showed continued softness. EIA 2026 forecast: Henry Hub averaging ~$3.50/MMBtu for full year (down ~2% from prior expectations). Storage/supply: Working gas storage ended winter slightly above five-year average, injection season expectations point to ample inventories supporting lower near-term prices. LNG/demand: Feedgas demand for LNG exports has seen seasonal maintenance impacts, longer-term growth in exports is key bullish driver for 2027+. SETUP: Support $2.85, Resistance $3.10, range-bound for now. GEOPOLITICS: No finalized deal as of May 27, but negotiations advancing. US officials indicated sides agreed in principle to framework reopening Strait, Iran committing to dispose of highly enriched uranium; details remained under negotiation. Trump said both sides close to finalizing terms involving strong inspections, emphasized no rush, US blockade would continue until deal certified/signed. Proposed framework: 60-day ceasefire extension, Strait de-mined/reopened for free passage (no tolls), Iran could sell oil with some US sanctions waivers, further talks address Iran's nuclear program, Iran would clear mines in ~30 days post-agreement. May 27 incidents: Iran accused US of violating fragile ceasefire with strikes near Strait (Hormozgan province targeting boats/missile sites or alleged mining attempts), US officials described actions as self-defense. Iranian position: Officials acknowledged understandings on large portion of issues, progress toward framework, but full deal not imminent, key disputes remaining (sanctions relief, nuclear details, Hormuz management). BOTTOM LINE: Crude consolidating $90-$95 waiting for deal announcement. If deal signed, expect break below $90, target $80-$85. If talks collapse, back to $100+. Gas soft, storage ample, prices stable. Capital preservation first.