April 28, 2020

April 28, 2020
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  • WTI is down 84c to $11.94/Bbl, and Brent is up 81c to $20.80/Bbl
  • Crude oil continued to slide to $10/Bbl as exchange traded funds (ETFs) and indexes flee the volatility of nearby futures contracts following a plunge into negative territory last week
    • S&P Dow Jones said it will roll out of its WTI crude contracts for June into July on Tuesday, due to the risk that June prices go negative (Bloomberg)
    • The USO ETF, which tracks the price of WTI, is also selling all of its WTI June contracts
    • The fire sale of the June WTI contract has kept the front contract depressed and in steep contango to July of about $7/Bbl
  • U.S. oil producers have started storing crude in the Strategic Petroleum Reserve (SPR) as commercial storage space near capacity and injection limits
    • This month, 1.1 MMBbl have been delivered into SPR following the Department of Energy allowing companies to rent about 23 MMBbl of capacity (Bloomberg)
    • The oil marked for storage under the program was to be aggregated from small, medium and large producers
    • Companies can schedule return of their crude through March 2021
  • Natural gas is up 6.1c to $1.880/MMBtu
  • AEGIS’ LNG arbitrage model have European Oil-Product linked contracts as more economic than FOB Henry-Hub Linked contracts
    • FOB stands for “Free on Board,” which means the buyer of an LNG tanker must cover the cost of shipping
    • As both European (TTF) and Asian (JKM) gas prices continue to fall below $2.00/MMBtu, EDF notes that 20 to 30 U.S. cargoes, totaling 60 to 90 Bcf, could be cancelled for the month of June
  • The total estimated quantity of LNG that has not been unloaded for at least 20 days increased by 16% over the last week (Bloomberg)
    • LNG volumes at sea were 2.5 million tons as of April 26, up from 2.15 million tons the prior week
    • AEGIS Notes, with LNG arbitrage all but eliminated, LNG shippers are mirroring the actions of oil market participants as shippers have become reluctant to unload their cargoes at the current depressed global LNG prices
  • Venture Global announced that it has raised the first LNG storage tank roof at its Calcasieu Pass LNG export facility in Cameron Parish, LA
    • The 1.8-million-pound tank dome and assembly were air-raised into place last Friday, on schedule and just eight months after the Louisiana project’s final investment decision
    • Calcasieu Pass LNG is estimated to have a capacity of 10 MMT/y (480 Bcf), with commercial operations beginning in the Fall of 2022
  • Eastern Ohio Ethane Cracker FID postponed indefinitely (Point Logic)
    • The FID for the project has been pushed back several times starting in 2017
    • The project is estimated to produce 1.5 MMT, up .5 MMT from what the project was originally estimated before a partnership was struck with Daelim

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