January 14, 2020

January 14, 2020
Print Friendly, PDF & Email
  • WTI is up 50c to $58.58/Bbl, and Brent is up 71c to $64.91/Bbl
  • WTI oil prices for the front month contract traded at a discount this week for the first time since November
    • The new contango (nearby contract months are less expensive than later months) for the first two months of futures is a reversal from the steep backwardation (downward sloping curve) observed recently
    • Easing tension in the Middle East brought WTI down to the lowest level in six weeks
  • New IMO low sulfur rules are having a big effect on the prices shippers pay for the fuel they use (Bloomberg)
    • Regulations began at the beginning of this year that forces shipping vessels to sharply reduce emissions of sulfur oxides from burning bunker fuel
    • Costs of the new fuel has skyrocketed and now the IMO compliant marine fuel has become more expensive than diesel and gasoline in Singapore, Asia’s oil-trading hub
    • Fuel is the maritime industry’s biggest expense and rising fuel prices adds to the cost of transporting goods and raw materials – potentially harming global supply chains
  • Natural gas is up 4.3c to $2.225/MMBtu
  • The Valley Crossing Pipeline, which feeds into the Sur de Texas pipeline, will undergo scheduled maintenance from January 16 to January 22
    • Flows on the pipeline hit a high of 1.1 Bcf last week, but will likely be reduced to just north of 0.1 Bcf over the next seven days
    • The basis impact may be most felt in the cash market due to the short-term disruption in flows
  • Both the Global Forecast and European weather models are now in agreeance that the end of January will be characterized by colder-than-normal temperatures
    • Risk remains around the intensity of this incoming cold front as forecasting models disappointed during a similar winter emergence last year
    • Overall, gas prices are higher prior to the market open as the overnight weather models added four Heating Degree Days

Access Our Deeper Market Insights

Product Factor Matrix

Proprietary view of priced-in factors driving the market vs. potential bullish and bearish surprises.

Learn More

Trading Recommendations

Clear trading recommendations based on real market opportunities that enable clients to take action.

Learn More

Market Data

A comprehensive suite of the latest curves, spot pricing, settles, and strips to drive confident hedging decisions.

Learn More

Benchmarking and Trade Analytics

Real-time access to analyze your hedging strategy against AEGIS benchmarks and current market activity.

Learn More