August 5, 2019

August 5, 2019
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  • WTI is down 83c to $54.83/Bbl, and Brent is down 93c to $60.96/Bbl
  • Fears of a deepening trade war keep WTI prices in the mid-fifties on Monday
    • Trump announced an additional 10% tariff of $300 billion of Chinese imports late last week
      • China then vowed to fight back against Trumps decision, ending a month long trade truce (Reuters)
    • The Chinese yuan weakened beyond 7 a dollar for the first time in more than a decade after President Trump said he could raise duties further if China failed to move quickly towards a deal (Bloomberg)
  • Tensions in the Middle East rose on the news that Iran seized another foreign tanker in the Persian Gulf on July 31, but the seizure has had little effect on oil price at the moment
    • Iran’s Revolutionary Guard (IRG) said on Sunday that Iran has seized a vessel, but did not give any details about the vessel
      • The IRG later announced that the vessel was an Iraqi oil tanker that Iran says was smuggling fuel and detained seven crewman
  • Put skew for Brent increased to the most bearish in a month Friday as the international benchmark lost 2.5% last week
    • Brent’s 2nd-month 25-delta put skew jumped to 4.5ppt on Friday, highest figure since July 4 (Bloomberg)
    • Put skew makes put options more expensive than corresponding calls. This can make costless collars less attractive as producers purchase a put and sell an offsetting call
  • Natural gas is down 7.5c to $2.046/MMBtu
  • Sempra Energy had several infrastructure updates during its second quarter earnings call
    • Cameron Train 1 is expected to begin commercial operations by mid-August
      • Trains 2 and 3 are still expected to begin service in 4Q2019 and 1Q2020
    • Sempra’s Port Arthur LNG facility, which will have a nameplate capacity of roughly 1.9 Bcf/d, has 70% of contracts in hand
      • Still no FID on the project, but the facility has requested a notice to proceed with a pre-construction and site preparation notice
  • LNG feed gas has fallen significantly to just above 4.0 Bcf/d
    • One of the biggest losses of flows comes from the TETCO interconnect at Gillis, LA as deliveries are down 400 MMcf/d after the pipeline explosion in central Kentucky (PointLogic)

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