NATGAS: Potential Impact of Straits of Hormuz Closure for Global Gas
Jun-13 10:56
A ‘worst case scenario’ for the gas market would see further escalation in the between Iran and Israel cutting off shipping via the Straits of Hormuz.
- LNG flows from Qatar, the UAE, and Oman would be disrupted, with Qatar alone comprising around 19% of global supply, Platts said.
- Qatar is now China’s largest LNG supplier, accounting for 33.4% of its total imports across Jan-April.
- China currently receives around 15.9m mtpa of LNG from Qatar and 800k mtpa from the UAE on long-term contracts, with volumes set to rise as signed contracts reach their start dates.
- The closure of the Straits of Hormuz would shift demand to unaffected regions to cover the loss, a boon for Australia.
- Russian LNG may also see increased demand, although sanctions will likely cap the upside.
- With the risk premium driving up JKM prices, there may be some demand destruction among price sensitive buyers, particularly in South Asia.
- Chinese buyers had been sitting out of the LNG spot market amid healthy domestic and pipeline supply, coupled with lower demand.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US TSYS: Modestly Firmer In A Thin Docket Before A Busy Thursday
May-14 10:50
- Treasuries are slightly firmer overnight, more comfortably back in the middle of yesterday’s range awaiting fresh drivers.
- It’s a thin data docket today (just weekly mortgage data) which sees Fed Vice Chair Jefferson in a little more focus at 0910ET, and with an eye on tomorrow’s April reports for US PPI and retail sales amongst others.
- US President Trump flies from Saudi Arabia to Qatar today.
- Cash yields are 0.5-1.5bp lower on the day, with declines led by the belly.
- TYM5 sits at 110-06+ (+ 07+) as it lifts a little more off yesterday’s latest lows of 109-30, on modest cumulative volumes of 280k.
- Technicals point to a bear mode condition, having most recently cleared support at 110-01+ (76.4% retrace of Apr 11 – May 1 bull leg) in a step closer to key support at 109-08 (Apr 11 low).
- Data: MBA mortgage applications (0700ET)
- Fedspeak: Jefferson (0910ET), Daly (1740ET) – see STIR bullet
- Bill issuance: US Tsy to sell $60bn 17-w bills (1130ET)
LOOK AHEAD: Wednesday Data Calendar: Fed Speak Goolsbee, Waller, Jefferson, Daly
May-14 10:49
- US Data/Speaker Calendar (prior, estimate)
- 14-May Chicago Fed Goolsbee appr 30 minutes into NPR's Morning Edition
- 14-May 0515 Fed Gov Waller on central bank research (text, Q&A)
- 14-May 0700 MBA Mortgage Applications (11.0%, --)
- 14-May 0910 Fed VC Jefferson economic outlook (text, no Q&A)
- 14-May 1130 US Tsy $60B 17W Bill auction
- 14-May 1740 SF Fed Daly fireside chat (no text, Q&A)
OUTLOOK: Price Signal Summary - Key Support In Gold Remains Intact
May-14 10:46
- On the commodity front, the latest pullback in Gold still appears corrective. Key short-term support to watch is $3202.0, the May 1 low. A clear break of this level would undermine the short-term bullish theme and signal scope for a deeper retracement. This would open $3164.3, 61.8% of the Apr 7 - Apr 22 upleg. Note that the 50-day EMA is at $3164.5 - a key support too. The M/T trend remains bullish, a reversal would refocus attention on $3500.1, the Apr 22 high and bull trigger.
- In the oil space, a downtrend in WTI futures remains intact and S/T gains are considered corrective. For now, the corrective cycle remains in play and price has traded through the 20-day EMA. Key resistance to watch is $63.55, the 50-day EMA. It has been pierced, a clear break of it would highlight a stronger reversal. This would open $66.41, the Apr 4 high. For bears a reversal lower would refocus attention on $54.67, the Apr 9 low and bear trigger.
