July 23, 2019

July 23, 2019
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  • WTI is down 18c to $56.04/Bbl, and Brent is down 24c to $63.02/Bbl
  • The US imposed sanctions on Chinese state-owned trading firm Zhuhai Zhenrong for allegedly continuing to accept Iranian crude (Argus)
    • On Monday US secretary of state Mike Pompeo said Zhuhai Zhenrong violated US law by accepting crude from Iran
    • China firmly opposed the action by the US, urging the US to “immediately correct its wrongdoing”
  • Brent’s put skew eased on Monday, reaching its least bearish level since October ’18 (Bloomberg)
    • Brent 2nd-month is near a rare call skew bias
    • Overall option volatility remains elevated. Both Brent and WTI 2nd-month implied vol are about 31.5
      • This is the highest level in nearly a month
  • API inventory data is due at 3:30pm CST
    • The Bloomberg survey expects a drop of 4.156 MMBbl/d in EIA figures due Wednesday
  • Natural gas is down 0.7c to $2.305/MMBtu
  • Both Elba Train 1 and Freeport Train 1 are producing and receiving feed gas, respectively
    • Elba is currently seeking permission to start flowing feed gas to its second train
    • Cameron Train 1 has officially completed the commissioning phase and is fully ready for future commercial operations
      • Trains 2 and 3 are expected to come online in 4Q2019 and 1Q2020 respectively
      • First cargo was shipped back at the end of May
    • Interestingly enough, LNG feed gas is hovering just off one-year lows at 5.2 Bcf/d
  • The hope was for July to provide the necessary weather to jumpstart natural gas spot prices, which are on track to be their lowest in 20 years
    • August is trending the same way with mild forecasts
      • LNG and power burn will continue to provide footing underneath prices, but weather is not cooperating
  • Kinder Morgan’s Permian Highway is still facing unusual local regulatory backlash from Katy, Texas
    • While this is unlikely to have much of an impact on the start date of the pipeline, it could influence future decisions regarding the potential Permian Pass pipeline

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