August 27, 2019

August 27, 2019
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  • WTI is up 59c to $54.23/Bbl, and Brent is up 41c to $59.11/Bbl
  • A day after President Trump offered to meet with Iranian President Hassan Rouhani, Iran officials all but ruled out talks until US sanctions are lifted
    • President Rouhani’s foreign minister, Javad Zarif, said during a visit to China and Japan that “a meeting between Iran’s President and Trump is unimaginable.”
    • Tensions have remained in the Persian Gulf as Iran has at times, disrupted the normal flow of tankers
    • AEGIS notes that any progress made on the sanction front between the US and Iran will be troublesome for crude oil prices
      • US sanctions have reduced Iranian oil exports by about 2 MMBbl/d since sanctions went into effect
  • Plains All American is removing a 5c/Bbl surcharge on its Cactus 2 crude pipeline
    • Plains had failed to receive an exemption on steel tariffs and was attempting to recover the costs
    • The removal comes after shippers on the pipe, ConocoPhillips and Encana Marketing, objected to the extra fee on Cactus 2
    • Cactus 2 recently started service this month, moving crude oil from the Permian basin in West Texas to Corpus Christi on the Texas Gulf Coast
      • The 5c/Bbl surcharge would have gone into effect on April 1
  • Natural gas is down 1.9c to $2.211/MMBtu
  • As China trade talks ebb and flow, many Wall Street analysts are predicting that “second wave” LNG facilities could delay their final investment decisions
    • Long-term contracts have become increasingly difficult to secure as global competition heats up
      • AEGIS notes this is especially true how, given current conditions, China, the world’s leading source of demand for LNG, has not imported any U.S. LNG since February
    • AEGIS notes that given the lack of new projects coming online between mid-2020 and 2021, timely completion of new liquefaction facilities will be crucial for future demand growth
  • Tropical Storm Dorian, which is still just north of South America, should be monitored closely as it makes it way towards the U.S.
    • Current spaghetti models forecast several possibilities of the storm making its way into the Gulf Coast
    • Tropical Storm Barry, the last storm that entered the Gulf, shut down +70%of oil production and +60% of gas production
      • Recovering U.S. LNG exports could also be impacted should this storm materialize
  • Flows on the TETCO line have partially restarted and are now averaging around 800 MMcf/d
    • The restoration of outbound capacity from the Appalachian region could slowly help to support local basis in the region

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