- 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
