April 27, 2020

April 27, 2020
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  • WTI is down $4.15 to $12.79/Bbl, and Brent is down $1.43 to $20.01/Bbl
  • U.S. oil futures slid over 20% on Monday morning, breaking a four-day winning streak
    • WTI has seen heavier selling pressure versus its international counterpart ICE Brent
    • Brent is priced on the water while WTI in priced at Cushing, Oklahoma, about 500 miles inland
    • As storage has started to fill up and U.S. oil infrastructure is stained, most land-locked crude grades have experienced substantial downward price pressure
  • South Korea has run out of commercial storage space for oil, according to Bloomberg
    • All 38 MMBbl of onshore commercial storage capacity is rented out
    • South Korea is the fourth nation in Asia to run out of commercial storage capacity
  • Holdings of the June WTI contract fell by 42% last week
    • The number of June contracts held is 338 thousand, nearly half the amount observed only seven days ago (Nymex)
  • Rigs seeking oil in the U.S. fell by 60 last week to now total 378 (Baker Hughes)
    • This is down from 805 a year ago
    • The largest decline was seen in the Permian, down 27 to 246 active rigs
  • Natural gas is down 13.8c to $1.608/MMBtu
  • The International Gas Union believes that the 5.63 Bcf/d of new LNG capacity, added in 2019, will prolong excess supply in the global markets until the mid-to-late 2020s
    • They go on to note that Final Investment Decisions could continue to be made, in light of depressed prices, if suppliers are willing to invest without securing long-term offtake agreements
    • June TTF futures settled at $1.853/MMBtu on Friday, while June JKM prices settled at $2.025/MMBtu and Henry Hub prices settled at $1.75/MMBtu
  • The CFTC reported that natural gas managed money net positioning is now positive, for the first time since May 2019, at +227 total contracts
    • Managed money long positions grew by 10,914 contracts to total 176,557
    • Managed money short positions fell by 24,005 contracts to total -176,330
  • Gas directed rigs decreased by 4 last week, bringing the U.S. total to 85 (Baker Hughes)
    • The Marcellus basin lost 3 rigs, The Haynesville basins lost 1 rig, while the Utica basin rig count remained unchanged
    • The gas rig count now sits below 50% of the year-ago level of 186
  • Environmental Groups seek additional review of FERC’s approval of Double E Pipeline (PointLogic)
    • The pipeline would transport 1.35 Bcf/d from the Delaware Basin to the Waha Hub
    • The groups cited COVID-19 market impacts as a potential concern, contending that with the cuts to drilling in the Permian and associated gas production, there is no longer a need for the pipeline

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