West Texas Intermediate traded slightly lower Monday morning (8:07 AM) to $58.85/Bbl amid broad geopolitical uncertainty
President Trump said the US is weighing its options in response to reports of deadly crackdowns in Iran (Bloomberg)
“We’re looking at it very seriously. The military is looking at it, and we’re looking at some very strong options,” Trump told reports Sunday on Air Force One
Vitol and Trafigura are in discussions with large Indian and Chinese refiners over potential sales of Venezuelan crude
Both companies have obtained a preliminary green light from the US government to market the oil
AEGIS notes that geopolitics surrounding Iran quicky stole the limelight from developments in Venezuela last week. Current market uncertainty and risk premia is likely allocated to developments in Iran and a potential US response. A reminder, many geopolitical events in the past few years have only yielded short pops in price before relaxing shortly after. Analysts are still focused on the large oversupply predicted in the global crude market.
Oil options market skew turns most bullish since June
As of Friday, Brent and WTI’s second-month call skews were the biggest since June, while volatility also climbed
The move in skew is positioning in response to protests in Iran
Money managers increased long positions in ICE Brent to the highest since November last week
For WTI, net-longs climbed by more than 2k lots to the highest since November
AEGIS notes that hedge fund net-length in WTI was near historical lows, which likely helped fuel last week’s rally, while geopolitical developments in Iran may have triggered additional short covering.
Natural gas trades higher, reversing losses from Friday
The February Henry Hub contract is trading slightly higher than Friday’s settlement, after falling 34c last week (8:20 AM)
Lower-48 weather forecast shifted cooler over the weekend, with population-weighted average temperatures forecast to fall below the ten-year average around the end of this week
Dry gas production is back above 109 Bcf/d, near record levels, according to data from S&P
Delfin expects investment decision on LNG plant by next month (Bloomberg)
Delfin Midstream anticipates securing an FID on its 1.76 Bcf/d offshore LNG export plant by next month, according to a statement from the company
Phase one will consist of three floating liquefaction vessels off the coast of Louisiana
The facility is currently expected to start up around the end of the decade
Speculators boost Henry Hub net-short position (Bloomberg)
Managed money participants increased their net-short position to a 13-month high according to CFTC data released on Friday through last Tuesday
Speculators positioning in Henry Hub futures has fallen sharply since November
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