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First Look - Goldman Sachs expects higher LNG prices

Oil trades higher on improved Chinese economic data
- China's manufacturing PMI increased to 51.5 in November, surpassing market expectations
- Oil is higher this morning despite a stronger US dollar
- Over the weekend, rebel forces in Syria captured the city of Aleppo in a new escalation of the decade-long conflict
Iranian oil flows to China impacted by US sanctions (BBG)
- A broadening of sanctions on vessels hauling Iranian oil has led to reduced flows and higher prices
- Oil often moves on sanctioned tankers from Iran to southeast Asia, where it is then loaded onto shuttle tankers for transit to China
- A number of operators have been forced to shift away from this journey, reducing the number of tankers available to Iran
- This has resulted in less Iranian crude flowing to China, which buys about 90% of the county’s exports

Warmer shift sends gas lower Monday morning with Nymex down 18c to $3.17/MMBtu (7:44 AM)
- Overnight demand losses win out, with weather models down 16-17 HDDs from Friday morning (CWG)
  - The forecast shows six more days of below-average temperatures for the Lower 48 before a warmer pattern emerges
- Goldman warns that Asia LNG prices may exceed $20/MMbtu (currently $15.13 for Feb) this winter
- Lower 48 natural gas supply stayed within a tight range over the Thanksgiving holidays between 102.3 and 102.9 Bcf/d (S&P Global data)
Higher JKM LNG prices are forecasted by Goldman Sachs (Reuters)
- The bank cited possible supply issues in Europe as the main reason
  - Limited spare capacity in Europe
  - Loss of Russian gas moving through Ukraine after the transit deal ends
  - Colder-than-average weather
- LNG supply projects in the Americas face delays, reducing available LNG for Europe and Asia in 2025
- AEGIS notes that higher JKM and TTF should not benefit Henry Hub prices for now as the US will export as much gas as they are capable due to an open arbitrage (this could change in a few years)