April 13, 2020

April 13, 2020
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  • WTI is up 26c to $23.02/Bbl, and Brent is down 20c to $31.28/Bbl
  • Oil remains little changed after rising in early trading, as traders assessed the impact of a historic deal by the world’s biggest producers to cut oil output
    • Futures were near flat this morning after the OPEC+ group agreed to a plan to cut production by 9.7 MMBl/d – near 10% of global supply – starting in May
    • The U.S., Brazil and Canada will contribute an additional 3.7 MMBbl/d in nominal production cuts as their output declines, and other G-20 nations will cut 1.3 MMBbl/d more (Bloomberg)
  • Drilling rigs seeking oil fell last week by 58, to now total 504, according to Baker Hughes
    • The Permian shouldered the brunt of the cut by dropping 35 to stand at 316
    • Producers continue to cut capex for 2020 as lower demand, caused by the coronavirus, has pushed prices down to the low $20’s
  • Natural gas is up 6.0c to $1.793/MMBtu
  • Goldman Sachs sees associated gas production falling by 4.6 Bcf/d in April and May (Bloomberg)
    • The EIA revised their April natural gas production outlook lower, by an average of 4.7 Bcf/d, across the forecasted April 2020 – December 2021 strip
    • AEGIS’ internal models suggest closer to a 7.0 Bcf/d drop, in dry-gas production, through the end of 2020
    • AEGIS also notes that hedges and Permian-basin flaring could partially mitigate some production declines
  • The Commodity Weather Group is forecasting April Total Degree Days to average near 450
    • Total Degree Days accounts for both heating demand and early season electric-weighted (South-Focused) cooling demand, according to the group
    • The 30-year average, for April Total Degree Days, is 427 while the 10-year normal is 421

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