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First Look - Freeport LNG suffers power loss

Oil is trading slightly lower after falling nearly $2 yesterday
- Trump threatened China and the EU with tariffs, while Canadian producers have been scrambling to send more crude to the US before tariffs take effect on February 1
- The market continues to focus on possible sanctions impact as well
  - Trump said additional sanctions on Russia may be imposed if Putin is not willing to negotiate on Ukraine
Russian tankers re-route due to sanctions (BBG)
- Tankers which previously transported Russian oil from their Western ports are being re-routed to service a route to China
- Freight rates may be part of the move, as the cost to book a vessel to transport Russia’s ESPO grade to China has more than tripled lately
- Recent US sanctions could threaten as much as 900 MBbl/d of ESPO exports, based on Bloomberg’s calculations

Natural gas for March, now prompt, was trading on either side of flat Wednesday morning at $3.78/MMBtu (8:04 CT)
- Weather forecasts were showing slightly warmer for the rest of January, but nothing materially changed
- The weather pattern set-up points to a warmer February, closer to the 10-year average, but data did hint at cooler air dipping into the Lower 48 by February 5
- Freeze-offs on Tuesday were estimated at 6.5 Bcf/d, according to data from S&P
  - Nominations for today showed a 3 Bcf/d recovery from Tuesday’s low of 96.8 Bcf/d
Issues at Freeport LNG
- Last night, US LNG feed gas flows were adjusted lower by 2.25 Bcf/d as Freeport LNG encountered problems (Criterion Research)
- Freeport experienced trouble due to onsite power issues, and its return depends on conditions stabilizing
- Temperatures are expected to rise over the next few days and should relieve stress on the power grid, allowing Freeport to return