April 2, 2020

April 2, 2020
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  • WTI is up $2.11 to $22.42/Bbl, and Brent is up $2.43 to $27.17/Bbl
  • Oil prices are up about 10% this morning as China starts buying cheap crude, and President Trump said he thinks Saudi Arabia and Russia would resolve their differences  (Bloomberg)
    • China’s government instructed its agencies to start filling state stockpiles after oil’s price plunge
    • During a recent presser, Trump struck a more optimistic tone in the price war between Russia and Saudi Arabia
    • AEGIS notes Saudi Arabia is still ramping up output to record levels this week
  • President Trump will soon meet with oil executives to discuss possible tariffs on oil imports into the U.S. from Saudi Arabia, and relief from the Jones Act
    • The Jones Act requires ships that transport goods between U.S. ports to be America-flagged
    • Reported attendees include executives from Exxon, Chevron, Oxy, Devon and Phillips 66, to name a few (Bloomberg)
  • Trafigura has revised higher its demand loss estimate to about 35 MMBbl/d as more countries go into lockdown, according to the company’s co-head of oil trading, Ben Luckock
    • The commodity trading house is taking a different approach to estimating the demand impact. Instead of trying to estimate the demand loss, they are trying to estimate demand using a bottom-up approach to actual consumption
    • Their estimates under this method cannot arrive at 70 MMBbl/d of consumption, according to the company
    • Demand losses are so large that any attempt to cut supply from Saudi Arabia or Russia wouldn’t impact the market. “We have no hope of production cuts matching demand destruction” Trafigura said
  • Natural gas is up 0.8c to $1.595/MMBtu
  • Cheniere has completed its 1.44 Bcf/d Midship Pipeline and is seeking FERC’s permission to service the project
    • The pipeline runs from central Oklahoma, Kingfisher County, to southeastern Oklahoma, in Bennington, where it will connect with the Gulf Crossing and Midcontinent Express pipelines
    • AEGIS notes that natural gas being carried from the SCOOP/STACK will likely bypass northern Louisiana and deliver onto the Transcontinental pipeline
    • This could not only impact Transco Zone 4 basis, but also anything upstream of this point – such as Northeastern producers who attempt to send gas south
  • Analysts expect a -25 Bcf withdrawal for the week ending March 27, this would be significantly less than the 6 Bcf build from the corresponding week last year
    • Analyst estimates ranged from a low of -5 Bcf to a high of -30 Bcf
    • A withdrawal within expectations would expand the surplus to the five year-average to 286 Bcf with total stocks at 1.98 Tcf
  • Platts assessed the May JKM contract, the Asian LNG benchmark, at $2.26/MMbtu. This represents a nearly 20% decline since last Friday
    • TTF prices, the European gas benchmark, continue to set fresh record lows at $2.19/MMBtu
    • LNG export terminals around the globe are looking to defer maintenance in effort to reduce capital expenditures on non-essential activity

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