April 21, 2020

April 21, 2020
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  • WTI is up $33.27 to $-4.36/Bbl, and Brent is down $5.43 to $20.14/Bbl
  • West Texas Intermediate crude fell below zero on Monday for the first time in history
    • The May WTI contract settled at -$37.63/Bbl yesterday amid rapidly filling storage tanks and the contracts’ expiry on Tuesday
    • For more details on what a negative oil price means for a hedge portfolio, please click here for our most recent market post
  • With the May contract expiring today, attention turns to June contract that will expire on May 19
    • Despite the headlines on Monday, trading volumes were mostly concentrated in the June contract, not May
    • This is typical when a contract is near expiry, but that means focus, and maybe downward pressure, is now on the June WTI future
    • Already this morning the June contract has dipped as low as $12/Bbl from $20/Bbl
  • Storage for oil is becoming harder and harder to find as every day passes. With global demand lower due to the coronavirus, some oil has nowhere to go except storage
    • Virtually all commercial onshore storage in the U.S. has been booked since the end of February, according to a Bloomberg report
    • Inventories at Cushing, Oklahoma – the world’s biggest commercial storage depot – were about 71% full as of last week, according to the EIA
  • Natural gas is down 2.0c to $1.904/MMBtu
  • Following the May futures price implosion for WTI yesterday, prompt-month gas prices soared almost 20%
    • According to the Intercontinental Exchange, during yesterday’s chaos, Permian spot prices dipped as low as $-10.00/MMBtu during intraday trading due to a force majeure
    • Also of note, OneOK basis is at its strongest level since January 2017 and is at a premium compared to many other Midcontinent basis locations
    • This is especially surprising given how the majority of OneOK’s customer pool resides in Oklahoma, whereas other pipelines, such as ANR, can reach premium demand markets like Chicago
  • Cheniere is facing at least ten canceled LNG cargoes, all for loading in June, according to Bloomberg
    • AEGIS noted previously that this summer could especially challenging on U.S. LNG exporters as margins continue to shrink, or go negative, and oil-linked cargoes become more competitive
    • June futures prices for both JKM and TTF continue to set lower lows, coming in at $2.27/MMBtu and $2.108/MMBtu respectively
  • On Monday first U.S. LNG tanker reaches China in 13 months (Reuters)
    • At least 5 additional tankers loaded on the Gulf Coast are current en route to China
    • China had agreed to increase its energy purchases from the U.S. by $53.5 billion in January, offering a limited number of tariff exemptions on commodities including LNG

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