August 28, 2019

August 28, 2019
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  • WTI is up $1.26 to $56.19/Bbl, and Brent is up $1.05 to $60.56/Bbl
  • Crude oil is trading higher after the American Petroleum Institute (API) reported a massive drop in crude inventories for the week ending August 22
    • Tuesday afternoon the API showed a drop of 11.1 MMBbl, compared to analyst expectations of around a 2.1 MMBbl draw
  • China’s crude oil imports were up 14% y-o-y in July as new refineries have come online
    • Imports were 9.67 MMBbl/d in July with Saudi Arabia supplying the most at 1.647 MMBbl/d
    • US crude imports to China rose in July by 93% from June to 351 MBbl/d, the highest level in 13 months (Argus)
      • Imports in the first seven months of the year were down by 64% from a year ago amid an ongoing US-China trade war
    • China announced late last week that it would impose a 5% tariff on US crude imports starting September 1
  • BP has agreed to sell its entire business in Alaska to Hilcorp Energy for $5.6 billion
    • The transaction will make Hilcorp the second-largest producer in Alaska behind ConocoPhillips
    • BP chief executive said “We are steadily reshaping BP and today we have other opportunities, both in the US and around the world”
  • EIA petroleum data is due out this morning at 9:30 am CT
    • U.S. Crude Inventories:                  –    2,941 MBbls (Bloomberg surveys)
    • U.S. Gasoline Inventories:              –       137 MBbls
    • U.S. Distillate Inventories:             +    1,156 MBbls
    • U.S. Refinery Utilization:               –     0.38% change
  • Natural gas is up 6.1c to $2.263/MMBtu
  • TC Energy’s 2.6 Bcf/d Sur de Texas (SDT) pipeline could finally see the resumption of activity within the next couple of weeks
    • Mexico’s president has officially ended the country’s arbitration dispute over several natural gas pipelines
      • Federal Electricity Commission (CFE) head Manuel Bartlett stated that the SDT will be the first pipeline to begin commercial operations
    • AEGIS notes that the forward curves for southeast Texas basis do not imply high utilization on this line at first
      • There may also be constraints that only allow local volumes to move to this new pipe
  • Cheniere’s Corpus Christi Train 2 has been cleared by FERC to begin service
    • Train 2 is currently undergoing commissioning, but could be completed within the next couple of weeks
    • Train 3 is expected to be completed in 2H2021
    • LNG feed gas remains strong at 6.5 Bcf/d
  • A second empty LNG tanker has now reportedly docked outside Freeport LNG’s liquefaction facility
    • However, according to the TCEQ, it appears Freeport has hit another mechanical snag as their main cryogenic heat exchanger went offline
      • This follows the gasket rupture earlier in the month that initially delayed exports
    • Flows to the facility are down 57% to 65 MMcf/d after setting records over the weekend

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