First Look

October 8, 2019

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  • WTI is down 70c to $52.05/Bbl, and Brent is down 76c to $57.59/Bbl
  • Crude oil prices are lower this morning following news that the White House is considering plans to potentially limit capital flows into China (Bloomberg)
    • China signaled that it would retaliate after the US placed eight of the country’s large technology companies on a blacklist
    • These developments likely add contention to the US-China trade war negotiations set to be held later this week
  • Freight rates for time-charter routes to transport crude to Asia continue to rise
    • Vessel rates in benchmark Middle East Gulf-to-China crude tanker route jumped 8.5% to Worldscale 120 (units of tanker costs) on Monday, a YTD high, according to Baltic Exchange data
    • The Wordscale rate equated to daily earnings of $97,907 (Bloomberg)
    • AEGIS notes a continued rise in shipping cost can narrow or even close the arbitrage to export US crude oil
  • Natural gas is down 2.0c to $2.283/MMBtu
  • The 1-to-5 day and 6-to-10-day forecasts show winter weather creeping into the central portions of the United States
    • However, given the low population density, this is unlikely to drive significant heating demand
    • The 11-to-15-day forecast predicts that the cooler weather will disappear and give way to warmer temperatures across the Southeast and Atlantic region
  • The U.S. Supreme Court is now getting involved in the Atlantic Coast Pipeline (ACP) debate
    • The 4th Circuit ruled that the ACP was not allowed to run underneath a section of the 2,200-mile Appalachian Trail back in December 2018
    • Dominion Energy, the pipeline’s primary developer, is arguing that this ruling effectively creates a 2,200-mile barrier for all future pipeline projects
    • A decision by the Supreme Court is due, at the latest, by June and could have implications in the development of the Mountain Valley Pipeline, the other heavily delayed Appalachian pipeline project which crosses the Appalachian Trail