December 18, 2019

December 18, 2019
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  • WTI is down 42c to $60.52/Bbl, and Brent is down 29c to $65.81/Bbl
  • Crude oil halted its previous four-day rally after the American Petroleum Institute (API) reported an unexpected build in crude inventories
    • WTI and Brent are trading down about 0.5% after the API reported a 4.7 MMBbl build in crude stocks versus what analysts were thinking would be a withdrawal
  • WTI’s Dec. 2020-Dec. 2021 spread’s backwardation sat at +$3.30 yesterday, the strongest settlement since Oct. 22, 2018
    • As the front of the curve has rallied, backwardation has steepened with the global oil markets remaining tight
    • AEGIS notes that the IEA forecasts over-supply in 1H2020 due to growth from non-OPEC nations even with additional OPEC+ cuts
  • EIA weekly data is due at 9:30 AM CST
    • U.S. Crude Inventories:                  –     2,126 MBbls (Bloomberg surveys)
    • U.S. Gasoline Inventories:             +     1,966 MBbls
    • U.S. Distillate Inventories:             –        188 MBbls
    • U.S. Refinery Utilization:               +     0.79% change
  • Natural gas is down 4.0c to $2.279/MMBtu
  • Appalachian gas production may record its first monthly decline since May (Platts)
    • Although not significant, a 0.2 Bcf/d reduction in production is being forecasted for the month of December in the region
    • Rig count in the region remains around 52, just slightly above where EQT’s CEO believes rigs need to remain to keep production flat in the Appalachia
  • Spot prices in the Northeast, Sumas, and Opal regions are being bid up likely as a result of the cold snap creeping across the country
    • Tennessee Zone 6 200 Leg is slightly over $11.00/MMBtu, as is Algonquin City Gate
    • This Arctic weather should be short lived as a sustained warming period is forecasted to emerge during the back half of the month
    • This unseasonably warm period for the end of 2019 continues to keep prompt-month gas prices subdued

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