April 22, 2020

April 22, 2020
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  • WTI is up 36c to $11.93/Bbl, and Brent is up 43c to $19.76/Bbl
  • As storage approaches tank tops, oil at negative $100 isn’t a crazy bet anymore (Bloomberg)
    • How is that for a headline…
    • The wild price action on Monday shows that the market will likely anticipate peak storage, rather than wait to drop when the storage limit is reached
    • Some oil producers have now re-drafted their contracts to stop their prices from going negative, according to Bloomberg
    • “We have clearly gone to a full-scale, day-to-day market management crisis,” said Paul Sankey, an oil analyst vet at Mizuho Bank
    • Sankey went a step further on Tuesday, saying: “Will we hit negative $100 a barrel next month? Quite possibly.”
  • Floating storage will swell to about 80 MMBbl be the end of April (IHS)
    • There is currently around 34 MMBbl of crude in floating storage globally, with another 45 MMBbl set to be loaded onto ships before the end of the month, according to IHS
    • The current maximum capacity for floating storage is about 190 MMBbl
    • IHS’s calculations exclude the Iranian fleet
    • Recently, there have been more VLCCs loading from the U.S. Gulf, headed for SE Asia or the Far East without buyers, implying some will be used to store crude
  • EIA weekly data is due at 9:30 AM CST
    • U.S. Crude Inventories:                  +     13,919 MBbls (Avg. Bloomberg surveys)
    • U.S. Gasoline Inventories:             +        4,551 MBbls
    • U.S. Distillate Inventories:             +       3,658 MBbls
    • U.S. Refinery Utilization:               –     1.96% change
  • Natural gas is down 2.1c to $1.800/MMBtu
  • Prompt-month natural gas prices have pared back most of the gains from Monday’s 20% rise, following May WTI futures collapsing to $-37/Bbl
    • The Commodity Weather Group is forecasting a cool weather outlook for May, with forecasted HDDs hovering just above the 30-year average of 157
  • The front of the Waha curve continues to see improvement with the June contract improving $0.40/MMBtu compared to last Monday
    • Bal ’20 and 1Q2021 have also made some stark improvements with prices rising close to $0.30/MMBtu each
    • AEGIS notes the continued basis improvement could be stemming from further expected rig cuts and heavier associated gas declines
  • Oregon state agencies have joined the legal fight against FERC’s approval of the Jordan Cove LNG Project (PointLogic)
    • Agencies included the Oregon Department of Energy, Department of Environmental Quality, Department of Fish & Wildlife and the Department of Land Conservation and Development
    • They contend that FERC’s approval of the project violated the Clean water Act and Zone Management Act
    • Pembina Pipeline has announced that the “first gas to reach the site is not expected until 2025”

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