August 18, 2020

August 18, 2020
Print Friendly, PDF & Email
  • Oil traded near five-year highs in New York, supported by a weak dollar
    • The greenback is the lowest in 18 months as of Tuesday
    • Oil is priced in dollars, therefore, when the dollar falls, goods priced in it become cheaper relative to other currencies
  • Gauges of Brent and WTI volatility fell to the lowest levels since January on Monday
    • WTI’s 2nd-month implied volatility fell to 29.4%, while Brent’s slipped to 29.5%, both were the lowest since January (Bloomberg)
    • Brent curve structure weakness continued as the October-November spread widened 2c to contango of -55c/Bbl on Monday, the weakest since May
  • The number of drilled but uncompleted (DUC) wells in the sevens major shale basins rose by 30 in July, the Energy Information Administration (EIA) said on Monday
    • The total number of DUC wells increased to 7,685 in July, driven by a 40-well increase in the Permian basin, according to the EIA’s monthly Drilling Productivity Report
    • The amount of DUC wells is declining in some basins as producers run through inventories of DUC wells while scaling back on new drilling
  • LNG feedgas rebound underway as flows hit highest levels in months
    • Feedgas flows were 4.9 Bcf/d on Monday, August 17, the highest level reached since June 25, still far removed from the high of 9.5 Bcf/d reached in April
    • Feedgas flows at Sabine Pass are up nearly 800 MMcf/d, from .7 Bcf/d to 1.5 Bcf/d. Freeport LNG flows were zero toward the end of July but have since returned to around .4 Bcf/d
  • Record temperatures in California fuel rally in local natural gas prices (Platts)
    • SoCal city-gate basis reaches $10.93/MMBtu, highest since February 2019
    • Demand on both the Southern California Gas and Pacific Gas & Electric systems has remained high since Aug. 14, averaging 2.87 Bcf/d and 2.64 Bcf/d, respectively, up around 630 MMcf/d (22%) and 700 MMcf/d (27%) compared with the month-to-date average, according to data from Platts Analytics
  • As demand remains elevated in the western half of the United States, especially California, basis locations such as Sumas, Malin, Northwest Rockies, and CIG have a seen pop in the front of their forward curves
    • Producer-area basis locations, like CIG, are up approximately $0.10/MMBtu in the front, while NW Rox has improved by $0.25/MMBtu
    • Demand center basis locations, like Sumas or Malin, have improved by $0.25/MMBtu to $0.30/MMBtu

Access Our Deeper Market Insights

Product Factor Matrix

Proprietary view of priced-in factors driving the market vs. potential bullish and bearish surprises.

Learn More

Trading Recommendations

Clear trading recommendations based on real market opportunities that enable clients to take action.

Learn More

Market Data

A comprehensive suite of the latest curves, spot pricing, settles, and strips to drive confident hedging decisions.

Learn More

Benchmarking and Trade Analytics

Real-time access to analyze your hedging strategy against AEGIS benchmarks and current market activity.

Learn More