August 3, 2020

August 3, 2020
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  • WTI is down 7c to $40.20/Bbl, and Brent is up 2c to $43.54/Bbl
  • West Texas Intermediate teetered around $40/Bbl Monday morning as OPEC+ producers began supplying more crude to the global market
    • OPEC and its allies will add about 1.5 MMBbl/d more this month than in July as it starts to unwind its output curbs
    • The economic outlook is still uncertain as many countries are still struggling to contain the coronavirus. This uncertainty has helped keep both WTI and Brent in a tight trading range around $40/Bbl
  • ExxonMobil expects its production to remain curtailed by 200 MBOE/d in 3Q as demand continues to recover slowly (Argus)
    • “Looking ahead to 2021, we see significant potential for additional reductions based on identification of further long-term structural efficiencies, reduced activity levels and an evaluation of our workforce requirements,” said senior vice-president Neil Chapman. “Including the potential for further reductions in overhead and management positions.”
    • Of the 200 MBOE/d in expected 3Q curtailments, 60k were for economic reasons and 140k were because of partnerships maintaining OPEC+ production mandates
    • Exxon cut its Permian rig count in half in the second quarter to 30 rigs and will likely cut it in half again by the end of the year, according to the company
  • U.S. crude output fell by nearly 17% in May, or nearly 2 MMBbl/d, as operators voluntarily shut production amid the pandemic (EIA)
    • Output in May averaged 10 MMBbl/d, down from about 11.99 MMBbl/d in April the Energy Information Administration (EIA) said Friday in its latest monthly data
    • The EIA monthly production data is based on a direct survey of oil producers in 15 states. The agency separately estimates weekly U.S. crude production
  • Natural gas is up 11.1c to $1.910/MMBtu
  • After some disagreement between the main weather models, with forecast differences being as wide as 15-20 CDDs, the three main ensemble models are all showing a restart of hot weather within the next week (Commodity Weather Group)
    • As a result, the August CDD forecast has increased to 355 which is good enough to be the seventh hottest August on record
    • The balance of summer strip is up $0.10/MMBtu this morning with Cal ’21 being up around $0.03/MMBtu
  • The CFTC reported that managed money long positions increased by 6,874 contracts to total 278,730 contracts
    • Managed money short positions decreased by 11,491 contracts to total 236,187 contracts
    • Net positioning has remained positive for the last four weeks with the last count at 42,543 contracts
  • The global LNG market has contracted for a third consecutive month (Bloomberg)
    • Global exports of the fuel last month dropped 9.4% from the previous year, the steepest year-over-year decline since at least December 2017, according to ship-tracking data compiled by Bloomberg
    • U.S. exports fell about 40% from a year earlier due to customers potentially canceling over 50 cargoes slated to load from Gulf Coast projects after the arbitrage opportunities to Europe and Asia disappeared

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