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Yea.... I thought I saw fog before in game, just me going crazy at night.
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There is fog in the game. You can see it if you set all the ingame display settings to to high. The fog covers you where ever you sail. I would prefer it be intermittent.
And personally when all the settings are high, you also get that cartoony floating Jolly Roger soul thing whenever you defeat an enemy which is actually pretty annoying to me.