September 16, 2019

September 16, 2019
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  • SPECIAL NOTE:  AEGIS Insights will be providing client wide updates today regarding any material developments via First Look, Webinar and Market Alerts .  For indications, hedge structuring and execution please contact  Need to review your current hedges and available capacity? and are available.  Looking for individual discussion on the recent developments? Contact from our Market Analytics desk as needed.
  • WTI is up $5.67 to $60.52/Bbl, and Brent is up $6.53 to $66.75/Bbl
  • The target of any retaliation by Saudi Arabia is critically important to the direction of current situation in the Middle East
    • Should SA counter with a precise response on Houthi forces it implies a more contained conflict
    • Should the response be targeted at Iran then we are opening a much more serious sovereign vs sovereign warfare
      • This would have major implications on stability in Iran, Iraq, SA, UAE, and Yemen in the medium-term
  • US DOE and President Trump have pledged releasing from the SPR to balance the oil markets should it be necessary
    • AEGIS notes this sounds comforting however these reserves were intended (back in the 70s and 80s) to supply the US in the case of another oil embargo at a time when we used to import a lot of oil.
    • In this case, we only import 600-750k Bbls of oil directly from SA, about 2.8% of total demand.  In the event that the international markets demand our oil from the gulf to back-fill SA or others exports – we are already close to max capacity for exported Bbls, running at ~3+ MMBbls per day the last few weeks
  • Natural gas is up 6.5c to $2.679/MMBtu
  • Natural gas is unlikely to have any fundamental forces act upon it due to the recent oil outages in Saudi Arabia
    • Prompt month prices are up almost 5.0%, to $2.68, prior to the market open
  • Cameron LNG has declared a force majeure for its Train 1 due to mechanical issues
    • Each Train represents roughly 0.5 Bcf/d of capacity
    • Feed gas flows currently stand at 6.5 Bcf/d

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