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First Look - Physical WTI prices fall to an eight-month low

Oil is trading slightly higher, reversing some losses from yesterday
- The API is forecasting a US inventory build of 914 MBbls ahead of the official EIA data release today
Physical WTI prices fall to an eight-month low (BBG)
- Prices for WTI Midland at the Magellan East Houston Terminal have fallen to the lowest level since October, at a 60c premium to NYMEX, amid weak overseas demand and inventory builds in the US
- The arbitrage for sending cargoes to Asia is currently closed, contributing to higher storage builds in the US
Exxon plans new Guyana project (BBG)
- Exxon is taking steps towards its seventh oil project in Guyana as it looks to expand its South American operations
- The Hammerhead project will produce as much as 180 MBbl/d as soon as 2029, pending approval by the Guyanese government
- Production in Guyana is expected to reach 1.5 MMBbl/d by 2029, up from 560 MBbl/d in 2023

Today is the last day of the July natural gas contract as it traded 3% lower Wednesday morning to $3.66 (8:13 AM CST)
- The U.S. LNG fleet continues to underperform
- Sabine Pass is still in maintenance
- The new Venture Global Plaquemines LNG facility received a nominal amount of gas today (Criterion)
Chienere’s maintenance
- Cheinere’s Sabine Pass LNG feedgas nomination measured below 4 Bcf/d for July 26
- This is about 1.25 Bcf/d lower than gas volumes coming into the facility back in early April
- Seasonal maintenance should be close to ending for the facility, where we should see volumes increase
Cal 2026 call skew continues to climb, presenting attractive costless collars for producers
- The call skew for Winter ’25-’26 is nearly two standard deviations above normal
- Interestingly, Summer ’26 is also carrying two standard deviations higher call skew
  - Summer natural gas strips typically have no call skew, as the chance for price blowouts to the upside is much less than in winter
- AEGIS has observed a spike in costless collar hedging over the past few weeks
  - Collar volume outweighed swap hedging action for only the 6^th time in over a year
- Note: skew is measured by subtracting the 25 Delta Call and 25 Delta Put