August 28, 2020

August 28, 2020
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  • WTI is down 4c to $43.00/Bbl, and Brent is down 5c to $45.04/Bbl
  • Oil prices remain stable as downstream operators assess damage to their facilities
    • One of the most powerful hurricanes to ever hit Louisiana largely left ports and crude facilities on the Gulf Coast unscathed
    • Refineries: (Bloomberg)
      • Phillips 66’s efforts to survey damage to its Lake Charlies facility may be slowed by a nearby fire at a chemical plant
      • Citgo’s Lake Charles refinery suffered damage from Laura. The plant may be shut for 4-6 weeks
      • Exxon’s Beaumont refinery on the Texas Gulf Coast will begin restarting Friday if an assessment shows no damage
      • Valero’s Port Arthur refinery, which was shut ahead of the storm , “is conducting a through safety, environmental, and operational assessment”
  • Refinery oil throughput has lagged as cracking margins have languished since the pandemic started earlier this year
    • U.S. refinery crude inputs have been about 2.5 MMBbl/d lower this summer than what is seasonally normal
    • The Nymex gasoline crack retreated $1.63 to +7.951/Bbl on Thursday, the weakest settlement since April 13
    • The 3-2-1 crack spread is near +$8.50/Bbl. The average spread for this time of year is usually +$16/Bbl
      • High product inventories have disincentivized running refineries at normal rates
  • Natural gas is down 1.7c to $2.693/MMBtu
  • The EIA reported a storage build of 45 Bcf for the week ending August 21
    • Total stocks are now at 3,420 Bcf with the end-of-season storage number being offered at 3,980 Bcf on ICE
    • The build was smaller than both last year’s 60-Bcf injection during the corresponding week, and the five-year average of 49-Bcf
  • U.S. dry gas production has reached a 30-day low of 85,015 MMcf/d
    • Gas production saw a week-over-week change of 2,340 MMcf/d, as GoM gas production was shut in in anticipation of Hurricane Laura
  • Companies look to assess damage to infrastructure in the wake of Hurricane Laura
    • Flows to LNG Liquefaction terminals have reached their lowest levels since February 2019, as plant closures ahead of Hurricane Laura knocked out demand. The closures put U.S. feedgas flows at 2.1 Bcf/d
    • According to Reuters, companies have begun organizing flyovers to assess the damage and ready personnel to restart the drilling platforms
    • AEGIS notes, we will likely not know the true extent of damage for a few days. Mechanical failure is common when performing a cold startup in refining/petrochemical units, revealing problems that may warrant another shutdown of certain units for maintenance

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