December 15, 2020

December 15, 2020
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  • WTI is up 44c to $47.43/Bbl, and Brent is up 36c to $50.65/Bbl
  • U.S. shale output is expected to decline by about 136 MBbl/d in January (EIA)
    • Output from shale formations is forecast to be around 7.44 MMBbl/d next month, with all seven major shale formations expected to see a decline aside from the Haynesville, which will likely remain flat, according to the EIA
    • The Permian is expected to account for the largest decline of the basins, with production expected to fall by 44 MBbl/d to 4.2 MMBbl/d
  • China sets a record for daily crude processing for a second straight month (Bloomberg)
    • Crude processing was at around 14.26 MMBbl/d last month
    • Several Chinese refiners are increasing their processing capacity, while demand has also forced state-run operators to raise refinery run-rates
  • OPEC President, Algeria’s Energy Minister Abdelmajid Attar, reiterates that OPEC should exercise caution in increasing output
    • Attar said there was no guarantee that the cartel would raise output by 2 MMBbl/d by April, as doubts of a quick demand recovery surfaced
    • OPEC said in its Monthly Oil Market Report (MOMR) that demand will rise by 5.9 MMBbl/d to 95.89 MMBbl/d in 2021. Last month, it predicted that next year’s consumption would grow by 6.25 MMBbl/d
    • The OPEC MOMR that the producer network could incrementally restore that full consignment over the next four months, without pushing world markets back into surplus
  • Natural gas is down 6.3c to $2.619/MMBtu
  • Gas futures for January are down this morning despite weather model changes showing a slight overall gain in heating degree days
    • The 11-14 day model changes presented more below-average temperatures in the East around Christmas day
    • More near-term forecasts show little change from previous runs, keeping more above-average temperatures across much of the Lower 48
  • U.S. natural gas deliveries into LNG facilities hit a new record of 11.6 Bcf/d as Asian prices reach yearly highs (Platts)
    • The Asian benchmark JKM (Japan-Korea Marker) was assessed at $12.213/MMBtu on December 14 according to Platts data
    • The JKM price is now double what it was trading three weeks earlier
    • LNG netbacks from the U.S. Gulf Coast from the JKM rise to about $6/MMBtu on December 14, a nearly $4.80/MMBtu premium to the TTF netback (Dutch)
    • AEGIS notes that U.S. LNG companies are having no problem shipping gas abroad with a wide open arbitrage – a striking change from this summer

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