April 8, 2020

April 8, 2020
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  • WTI is up 33c to $23.96/Bbl, and Brent is up 7c to $31.94/Bbl
  • Oil prices remain steady as investors await a meeting between global producers on Thursday and Friday
    • Saudi Arabia and Russia are hammering out an agreement that a delegate said will reduce global output by about 10 MMBbl/d, according to Bloomberg
  • Oil futures have come off recent lows as production cuts are in the works, but physical prices continue to fall as refineries cut the amount of crude they process
    • Landlocked crude grades in North America are still languishing. In Canada, Western Canada Select (WCS) is worth $3.92 as of Tuesday
    • U.S Bakken crude at Clearbrook is under $10/Bbl
  • The U.S. Energy Information Administration (EIA) projected that U.S. output will slowly fall through the first quarter of 2021 to just under 11 MMBbl/d, or about 1.8 MMBbl/d less than the peak observed in 4Q2019
    • In the agency’s monthly short-term energy outlook (STEO), the EIA said “The private sector and the free market are driving those cuts”
  • EIA weekly data is due at 9:30 AM CST
    • U.S. Crude Inventories:                  +     9,678 MBbls (Avg. Bloomberg surveys)
    • U.S. Gasoline Inventories:             +      5,821 MBbls
    • U.S. Distillate Inventories:             +         787 MBbls
    • U.S. Refinery Utilization:               –     1.79% change
  • Natural gas is down 1.9c to $1.833/MMBtu
  • More than a third of new U.S. electricity generation, roughly 4.9 GW, is expected to either be canceled or delayed indefinitely in 2020 according to the EIA
    • AEGIS has noted before that new renewable capacity additions were set to significantly outpace new natural gas capacity additions this year, potentially taking away from natural gas demand heading into 2021
    • Of the 4.9 GW anticipated to be delayed this year, renewables account for 3.3 GW
    • Any delays or cancellations in previously planned renewable projects could provide a slight boon to natural gas demand in 2020 and 2021
  • EIA released their latest Short-Term Energy Outlook report, updating their outlook for Natural Gas & Crude
    • The April STEO forecast showed that natural gas demand is expected to drop by -1.2 Bcf in 2020 and -2.6 in 2021, fueled by COVID-19 demand destruction and low global LNG prices
    • The STEO report also showed natural gas production dropping by -.3 Bcf/d in 2020 and   -4.4 Bcf/d in 2021
    • AEGIS notes, the report shows the supply/demand imbalance taking a bullish turn toward the end of the year (4Q 2020) as demand affected by COVID-19 recovers and production begins to come off-line at a rate quicker than that of demand

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