April 6, 2020

April 6, 2020
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  • WTI is down $1.00 to $27.34/Bbl, and Brent is down 77c to $33.34/Bbl
  • Oil recovered most of its losses this morning amid indications that Saudi Arabia and Russia are making progress toward an oil output agreement (Bloomberg)
    • Futures fell ~3%, having earlier dropped 11%. The meeting of OPEC+ and others was supposed to take place on Monday, but is now tentatively set for Thursday
    • Saudi Arabia and Russia are “very close” to an agreement of cuts, CNBC reported Monday. Lack of participation from the U.S. could prove to be a roadblock
  • President Trump threatened to use tariffs to protect the U.S. energy industry from a global glut of oil
    • During a Saturday presser, Trump said he would use tariffs if needed, even as he predicted that Saudi Arabia and Russia would come to an oil cut agreement
    • Trump said he wasn’t inclined to target Russia or Saudi Arabia oil tariffs. The U.S. imports about 400 MBbl/d from Saudi Arabia out of about 6 MMBbl/d, down from 1.2 MMBbl/d prior to OPEC production cuts in early 2017
  • U.S. Oil-directed rigs fell 62 to 562 last week, according to Baker Hughes
    • Leading the losses was the Permian basin with 31
    • Last week marked the largest single-week drop in five years. It is also the fewest number of active rigs since January 2017
  • Natural gas is up 4.2c to $1.663/MMBtu
  • According to Bloomberg, 72% of all new global power additions were made up of renewables in 2019,
    • Domestically, renewable capacity additions, assuming a 30% utilization rate, are set to outpace natural gas capacity additions in 2020
    • AEGIS notes that renewables creep in 2020 could be a bearish risk to natural gas demand; that risk further extends into 2021 given how most new additions will come on at the end of the year
  • Managed-money long positions rose by 3,593 contracts to total 139,492 contracts
    • Managed-money short positions fell by 12,512 contracts to total 208,983 contracts
    • On a net basis, managed-money positioning is at its most bullish since June 2019
  • Three U.S. LNG tankers are signaling China as their destination according to Bloomberg
    • The first U.S. LNG tanker, that was bound for China several weeks ago, was reportedly re-routed to Taiwan
    • China has not imported U.S. LNG since April 2019 due to trade war disputes

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