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First Look - Oil trades modestly lower as the market weighs Middle East risks | Libya makes progress toward oil production restart

Oil is trading slightly lower as the market weighs Middle East risks
- Over the weekend, Israel launched additional strikes against Hezbollah in Lebanon, killing a key Hezbollah official and potentially preempting a ground invasion
- Investors continue to weigh the recent Chinese stimulus move, aimed at shoring up the Chinese economy and supporting demand
Libya makes progress toward oil production restart (BBG)
- Libya’s eastern-based government approved a new central bank governor, ending a standoff over the central bank which led to the shutdown of oil production in the country
- Libya normally produces about 1.2 MMBbl/d, but exports have been limited to about 450 MBbl/d since the start of the standoff
- With the issue seemingly resolved, production should return to normal soon

Natural gas is trading lower as utilities began the process of recovering from former Hurricane Helene
- Prompt gas was 1.9c lower to $2.883/MMBtu (As of 8:00 AM)
- Winter ‘24/’25 strip is down 2.2c to $3.277, and the Summer ’25 strip is down 0.2c to $3.250
- Helene, a Category 4 hurricane and the most powerful system to make landfall this year, disrupted over 20% of GOM production last week, reducing output to 99 Bcf/d
  - Nearly all production was restored by Monday, bringing total output back to 101 Bcf/d (Woodmac)
- Today's 00z model reversed Friday’s colder shift, showing significant warming across all regions, with Lower 48 temps rising +18.8 F, and the Midwest seeing the largest increase at +27.8 F (Criterion)
Chesapeake CEO says LNG worth the risk if deals are right (NGI)
- Chesapeake aims to have 15-20% of its production volumes exposed to the international LNG market
- Chesapeake’s U.S. gas production could reach 7 Bcf/d after its acquisition of Southwestern Energy, and CEO Dell’Osso noted the need for total U.S. production to increase from 100 Bcf/d to 120 Bcf/d by the next decade to meet future LNG demand
- Chesapeake signed its first binding LNG agreement for 0.5 mmty from the Delfin project and could expand to 1.5 mmty with Gunvor. A tentative deal with Vitol could add up to 1 mmty more
- Dell’Osso emphasized the importance of partnering with large players and diversifying into LNG as a strategic move to avoid being constrained by domestic markets