August 7, 2019

August 7, 2019
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  • WTI is down $1.36 to $52.27/Bbl, and Brent is down $1.19 to $57.75/Bbl
  • Brent is now trading at a seven-month low at about $58/Bbl
    • Price has fallen more than 20% since April 2019 peak with about 10% of the drop attributable to President Trump saying last week he would slap further tariffs on China
    • Deterioration of trade talks between China and the US have deepened concerns about the demand outlook
    • AEGIS notes that despite WTI trading at $52/Bbl, it is still trading range bound between $50 and ~$62 that started at the beginning of the year
  • Plains All American Pipeline said its Cactus 2 pipeline is mechanically complete from Wink, Texas, to Ingleside near Corpus Christi and is 50% filled with crude
    • The pipeline will start initial service around August 15
    • The company also said it plans to be at full service on Cactus 2 by 1Q ‘20
    • Cactus 2 is the first major crude pipeline to add capacity out of the Permian basin this year
  • The EIA lowered its domestic crude output forecast for 2019 by 0.7% to 12.27 MMBbl/d, but kept its 2020 US crude oil production estimate flat at 13.26 MMBbl/d, according to its monthly Short-Term Energy Outlook
    • The EIA expects a slowdown in monthly production growth in the Lower 48 averaging 50 MBbl/d per month from the fourth quarter of 2019 through the end of 2020
      • This is in contrast to an average growth of 110 MBbl/d per month from August 2018 to July 2019
  • Natural gas is up 1.3c to $2.124/MMBtu
  • EnLink Midstream has signed an agreement to serve feed gas to Venture Global’s Calcasieu Pass LNG Terminal
    • While the Calcasieu Pass has yet to receive a positive FID, given EnLink’s commitment and the ten billion in capital raised, the decision could be decided on in the near future
      • The project timeline originally called for a 1H 2019 FID
    • The Calcasieu Pass will be able to export roughly 1.3 Bcf/d
  • The back half of August appears poised for some more typical summer weather according to the 11 to 15-day forecast
    • That being said, we are running out of summer to rely on weather to rally gas prices
      • The rest of August appears to still be remaining cool

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