July 22, 2019

July 22, 2019
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  • WTI is up 81c to $56.44/Bbl, and Brent is up 93c to $63.40/Bbl
  • Both WTI and Brent are higher this morning after Iran’s seizure of a British tanker last week in the Persian Gulf
    • The latest incident involving Iran has added to the geopolitical risk premium as market participants fear supply disruptions
  • Libya’s largest oil field went offline on Friday and is only now producing at half capacity
    • The Sharara oil field has about a 300 MBbl/d capacity
    • The combination of geopolitical tensions and outages in Libya are both causes of today’s higher open
  • Hedge funds boosted their bets on rising crude oil by the most in four month as of July 16 (CFTC)
    • Money managers are now net-long on WTI by 199,644 contracts. Outright long positions were increased by about 40,000 contracts but shorts were left mostly untouched
    • Rising tensions in the Middle East look to be drawing in hedge funds who would be poised to benefit from further escalation (Bloomberg)
  • Iran is squirrelling away millions of barrels of oil into storage tanks at Chinese ports (Bloomberg)
    • Iranian crude is being put into what’s known as “bonded storage” which doesn’t cross local customers or show up in the nation’s import data
    • The oil is not in circulation for now, but is a building supply source hanging over the market
  • Natural gas is up 2.4c to $2.275/MMBtu
  • FERC has granted Freeport LNG the right to start flowing gas into its first train
    • Train 1 should be commercially operational in September
    • Freeport’s Train 1 is among the last of the first wave of LNG projects to come online
  • Despite record temperatures this past weekend, short term forecasts have weather significantly cooling off
    • This cooling wave comes on the back of a 70.4 Bcf peak in demand on Friday, the highest of the cooling season thus far
    • Mid-term outlook has noticeable heat re-emerging in western and northeastern markets
  • Permian gas prices have reached a four-month high
    • The earlier-than-anticipated startup of the Gulf Coast Express should help to bolster prices going forward

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