January 9, 2020

January 9, 2020
Share
Print Friendly, PDF & Email
  • WTI is down 22c to $59.39/Bbl, and Brent is down 28c to $65.16/Bbl
  • Oil prices are steady this morning after a sharp drop on Wednesday following a de-escalation between the U.S. and Iran
    • The prospect of an open war in the Middle East has backed off for now
    • Price is now lower than right before the U.S. took out Iran’s top general as the multi-dollar geopolitical risk premium has evaporated
    • Wednesday’s price action saw nearly a 10% intraday range, the largest one day range movement in at least the last five years in terms of dollars
  • US crude stocks surprised analysts yesterday after showing a build where the consensus was a material withdrawal
    • Crude inventories rose by 1.2 MMBbl as exports and refinery runs fell sharply for the week ended January 3
    • Large product builds also helped make the data release bearish
    • US gasoline stocks rose by a whopping 9.1 MMBbl, the largest weekly build in four years
    • Distillate fuel stocks increased by 5.3 MMBbl to 139.1 MMBbl
  • President Trump held a press conference on Wednesday morning calling for peace but also promising to levy more sanctions on Iran
    • He opened his presser by saying that Iran will never be able to obtain nuclear weapons
    • Overall rhetoric was called for de-escalation and a path away from further military action
  • Natural gas is down 1.5c to $2.126/MMBtu
  • Analysts estimate a -50 Bcf withdrawal for the week ending January 3, 44 Bcf less than the -94 Bcf withdrawal in the corresponding week last year
    • This would be the smallest January withdrawal since 2009, according to Bloomberg
    • Estimates ranged from -41 Bcf to -63 Bcf
    • A withdrawal within expectations would put total storage at a 100 Bcf surplus to the 5-year average
  • Cheniere has filed a second request to begin early work on its roughly 1.5 Bcf/d Midscale Stage 3 expansion project
    • FID is expected in 2020 with a targeted in-service in mid-2021
    • There is approximately 7.2 Bcf/d of new LNG capacity currently under construction and some 47 Bcf/d of pre-FID projects that have yet to be approved
    • However, as new trains have come online, global LNG markets have faced increased oversupply, resulting in a deterioration of global benchmark prices and creating added pressure for projects working towards FID

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