April 14, 2020

April 14, 2020
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  • WTI is down $1.07 to $21.34/Bbl, and Brent is down 63c to $31.11/Bbl
  • Oil prices have slid into the low $20’s this morning as coordinated supply cuts are no match for the contraction of around a third of global oil demand due to the outbreak
    • The front of the WTI forward curve settled Monday at weakest level for the prompt spread since February 2009
    • WTI May-June spread moved further into contango at -$7.26 on Tuesday morning
  • Chinese oil producers are urged to copy the hedging strategies of Mexico and shale firms in the U.S. (Bloomberg)
    • A researcher at China’s National Petroleum Corp. said Chinese firms should use derivatives to ensure stable returns on the crude the sell
    • “Now that Shanghai crude oil futures are listed and functioning well, it is necessary to make full use of financial means to hedge the risk of price fluctuations,” the researcher said
    • Most of China’s oil production is unhedged
  • Oil is once again set to move from the U.S. Gulf Coast to Cushing, Oklahoma
    • A subsidiary of Enterprise Products Partners LP filed with regulators Monday and said it planned to start temporary service using leased pipeline capacity after receiving customer interest (Bloomberg)
    • “Given the current turmoil in the crude oil market, including impacts on both refinery and export demand, there is a strong interest to access the Cushing storage market,” Enterprise wrote in the filing
  • Natural gas is down 2.7c to $1.697/MMBtu
  • The GIIGNL, a non-profit which promotes the development of LNG, released their 2020 annual report
    • There is approximately 56 Bcf/d of total liquefaction capacity in the world and 121 Bcf/d of regasification capacity globally
    • The total liquefaction capacity is split between 21 exporting countries, while the regasification capacity is split between 42 importing countries
    • Europe’s LNG imports grew 75.6% year-over-year to make up 24.2% of the global market
  • A takeover offer for the 1.1 Bcf/d Magnolia LNG export terminal has officially been withdrawn (Platts)
    • The offer would allow construction of the export project to continue after necessary bridge financing fell through in March
    • LNG Limited has said the two parties remain interested in working out a new transaction where the Singaporean investor (LNG-9) will acquire all or part of its LNG assets
    • AEGIS notes that LNG liquefaction terminals may continue to face troubles signing firm-offtake agreements, especially this summer, as low international pricing could make some U.S. exports uneconomic

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