The WTI prompt-month contract rose $1.21 to $60.57/Bbl on Friday morning (7:45 AM CT)
President Trump said the U.S. has an “armada” heading toward Iran, prompting the market to reprice geopolitical risk
U.S. officials said warships, including an aircraft carrier and guided-missile destroyers, are expected to arrive in the Middle East in the coming days
Meanwhile, oil production at Kazakhstan’s Tengiz oilfield has yet to resume following a fire that forced a shutdown earlier this week
The EIA reported a crude stockpile build of 3.6 MMBbls last week
Stockpiles slow to build (Goldman Sachs)
Global stock builds slowed to 700 MBbl/d over the past two weeks, undershooting expectations amid disruptions to Kazakh supply and colder weather
This compares with an average build of 1.7 MMBbl/d over the prior four weeks
OECD commercial inventories accounted for “essentially all” of the estimated global builds over the past two weeks
Oil-on-water peaked earlier this month but remains elevated
While Russia, Iran, and Venezuela account for only ~14% of global production, they represent roughly two-thirds of current oil stored on water
Natural gas trades higher after intense intraday volatility
Yesterday and early this morning, The February Henry Hub contract traded in a range between $4.67/MMbtu and $5.665/MMbtu
February is on track to gain more than $2 this week, in the largest weekly price move in the history of Henry Hub
Freeze-offs have already begun impacting supply, with dry gas production down to 105.2 Bcf/d, according to data from S&P
Imports of gas from Canada have surged to more than 9 Bcf/d, helping to make up for the supply shortfall
Yesterday, the EIA reported a -120 Bcf withdrawal, which was larger than expected but smaller than the five-year average
Inventories are now 177 Bcf above the five-year average, but should tighten once data for next week is released on February 5
At least 170 million people are in areas likely to be impacted by what is expected to be one of the strongest winter storms in recent years
Electricity and spot gas prices have begun to rally, with off-peak ERCOT prices for this weekend and Monday trading as high as $1,000/MWh, and west Texas gas prices trading to $12/MMbtu for this weekend
Prolonged power outages could impact some regions amid snow and ice
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