June 25, 2019

June 25, 2019July 1st, 2019
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  • WTI is up 1c to $57.91/Bbl, and Brent is down 2c to $64.84/Bbl
  • Iran said that US sanctions imposed on the country’s supreme leader and other top officials permanently closed the patch to diplomacy (Reuters)
    • The Foreign Ministry spokesman of Iran Abbas Mousavi, tweeted “Imposing useless sanctions of Iran’s Supreme Leader and the commander of Iran’s diplomacy is the permanent closure of the path to diplomacy”
    • New sanctions from the US target high ranking officials in Iran and their access to accounts in financial institutions with ties to the US
    • The geopolitical risk premium in the Middle East remains elevated as long as the US and Iran do not take steps to cool tensions
  • Light Louisiana Sweet-WTI is at the smallest premium since March 25 at +$5/Bbl
    • LLS’s premium to WTI has fallen from over +$8/Bbl in late May
    • Magellan East Houston-WTI has seen much of the same price action, nearly matching LLS’s moves versus WTI
    • WTI has gained strength when compared to more waterborne US crudes like MEH and LLS
    • WTI had been weak in May and parts of early June compared with coastal crude grades in part due to rapid builds in domestic crude storage and lower y-o-y refinery runs
  • Natural gas is down 2.5c to $2.278/MMBtu
  • TC Energy’s 2.6 Bcf/d Sur de Texas-Tuxpan pipeline has begun receiving initial natural gas supply
    • The pipeline will be critical for Mexico as the country is currently facing extreme gas shortages and the potential for blackouts in some areas
    • The pipeline runs from south Texas into central Mexico, through the Gulf of Mexico
  • Prompt month natural gas prices have recovered from a 3-year low of $2.185/MMBtu to approximately $2.30/MMBtu
    • A  driver of this price recovery is Cheniere’s Corpus Christi Train 2, which is currently in the process of taking in approximately 670 MMcf/d of feed gas to begin liquefication processes (Platts)
    • Also driving prices are short to midterm weather forecasts which predict weather will either be normal, or warmer than normal, after consistently mild temperatures

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