First Look: Oil trades above $80 as geopolitical risk premium rises

Oil is trading higher above $80 as geopolitical risk premium rises
- WTI has rallied over $2 to start the week, following an increase in tensions from the Middle East after Israel launched large airstrikes against Gaza
- Some Chinese refiners are cutting processing rates due to weak refining margins, which have been weakening for several months
Ship hit by two Houthi missiles in Red Sea (BBG)
- A ship was struck twice in one day by missiles fired by Houthi militants in the Red Sea, supporting the geopolitical risk premium in crude prices
- The ship is reported to be a bulk carrier and was able to continue its voyage
- Ship traffic has been discouraged from using the Red Sea due to continuous missile attacks, forcing ships to take longer routes around Africa
  - This has supported demand for ship fuel and increased the amount of time it takes for oil tankers to reach their destination

Natural gas prices trade lower as June ’24 Henry Hub heads for expiry
- June ’24 Henry Hub is down 6c this morning to trade around $2.53/MMBtu
- The Summer ’24 strip is down 5.7c to $2.754 and Winter ‘24/’25 strip is down 3.6c to $3.525
- Today’s Euro Ensemble indicates a colder shift in the central US, especially the South Central region, with warmer coasts and similar overall patterns to yesterday, while mid-June forecasts indicate higher nighttime lows and consistent daytime highs (Criterion)
Glenfarne seeks five more years to build Texas LNG export plant (Reuters)
- Glenfarne Group requested FERC to extend the Texas LNG export plant's in-service date to Nov. 2029, citing uncontrollable delays
- Texas LNG was initially approved in Nov. 2019 with a construction deadline of Nov 2024 but faced delays from litigation and state permitting issues
- The plant will have two liquefaction trains, converting 0.5 Bcf/d of natural gas into 4 mtpa of LNG, costing an estimated $3.2 billion to $4 billion
- Glenfarne has nonbinding LNG supply agreements with Gunvor and EQT and is also developing the 8.8-mtpa Magnolia LNG export plant in Lake Charles, Louisiana