December 10, 2020

December 10, 2020
Print Friendly, PDF & Email
  • WTI is up 52c to $46.04/Bbl, and Brent is up 57c to $49.43/Bbl
  • WTI is trading slightly higher this morning, clawing back yesterdays’ losses and then some
    • China refineries are helping to balance the physical market, buying up many cargoes for delivery in 1Q2021
    • The EIA’s reported 15 MMBbl increase in crude stocks took the market by surprise. Still, oil prices remained undeterred despite the bearish numbers
  • China’s private refiners’ early buying helps prop up the physical crude markets (Bloomberg)
    • Luqing Petroleum has bought about 6 MMBbl for delivery from January to March. Additionally, China’s “teapot” refineries have also been active in the physical market and are seeking cargoes
    • Usually, Chinese companies do not purchase crude until all middle-east OSP’s have been released; however, the increased competition has buyers scrambling to ensure they can secure the cargoes needed
  • The market received bearish signals from the EIA’s weekly crude stats report, as U.S. stocks increased by the most since April
    • The EIA reported a build of 15 MMBbl for the week ending December 4. This was in contrast with the average estimate of an 849 MBbl draw as reported by Bloomberg
    • Crude inventories for the U.S. are now at a surplus of 56.13 MMBbl to last year and a surplus of 47.7 MMBbl to the five-year average
    • Upon further examination, the figures show net imports rose by 2.6 MMBbl/d during the week ending December 4, 2020. This equates to roughly 18 MMBbl in the market, which helps explain the large build reported by the EIA. Imports rose by 1 MMBbl/d during the week, while exports decreased by 1.6 MMBbl/d
    • The large change in net imports comes as a surprise, as U.S. refineries are struggling, and storage levels are already inflated. U.S. Gulf Coast crude stocks rose by a record 11.8 MMBbl, the most ever recorded
  • Natural gas is up 0.9c to $2.451/MMBtu
  • Asian spot LNG prices ascended above $9/MMBtu, the highest level in the last two years as prompt demand from India coincides with supply outages (Tellurian)
    • Buyers in Asia (particularly India) continue to soak up LNG cargoes amid supply constraints, and Europe could be scrambling for LNG as winter nears
    • The spot Asian LNG price premium over TTF is the highest since June-2018, and given a tight vessel market, prompt LNG cargoes could be hard to attract this winter
  • Weather model changes in the past 24-hours showed a cooler Midwest to East Coast for the 6-10 window and a warmer southern tier in the 11-14 day timeframe
    • The changes amounted to an increase of 2.4 HDDs or ~4.8 Bcf, according to Commodity Weather Group (CWG)
    • While the changes were cooler nationwide, daily weather maps for the next two weeks are still above-average
    • December is close to edging into the top ten warmest, much like last year did at sub ~770 heating degree days (HDDs) (CWG)
    • For reference, the coldest December since 1950 was 1989 at 1103 HDDs and the warmest was 2015 at 632 HDDs
      • In the peak of winter, 1 HDD is approximately 1.7-2 Bcf of demand

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