December 22, 2020

December 22, 2020
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  • WTI is down 67c to $47.30/Bbl, and Brent is down 63c to $50.28/Bbl
  • WTI retreated from its ten-month high on Monday, falling $1.36/Bbl for its worst drop since early November
    • Congress passed a stimulus bill as coronavirus infections continue to mount in the U.S.
    • New coronavirus mutation causes several countries to lockdown borders and limits travel
  • $900 Billion COVID-19 relief bill advances to the president’s desk following months of turbulent negotiations
    • Key provisions will include:
      • $284 billion for forgivable Paycheck Protection Program loans
      • Enhanced jobless benefits of $300/week and direct payments of up to $600 per person
      • $45 billion to support transportation services, including airports, Amtrak, and airline employees
    • AEGIS notes that the stimulus will likely boost short-term demand and help strengthen consumer spending as rising COVID-19 infections continue to stymie demand.
  • London COVID-19 variant prompts several countries to impose travel restrictions and lockdown borders
    • The variant has replaced other versions of the virus at a rapid pace, with the virus mutations increase the transmission rate. Current estimates suggest the new strain is up to 70% more contagious than its parent strain
    • India, Pakistan, Russia, Jordan, Hong Kong have suspended travel from Britain along with a host of other countries in the EU. Additionally, Saudi Arabia, Kuwait, and Oman have shut off their borders completely to mitigate the spread of the new strain
  • Natural gas is up 7.5c to $2.780/MMBtu
  • Gas prices rise as weather models show cooler temperatures in Texas and the West for the 6-10 day window and mostly colder changes in the Midwest and south for the 11-15 day
    • The cooler changes amounted to 6.2 HDDs (heating degree days), or about 12 Bcf, over the 15 day forecast (CWG)
    • The remaining three months of the winter strip have rose 7.7c to $2.76 this morning
  • An apparent lack of shipping availability and high charter rates have pushed Italian utility Enel to cancel a February LNG cargo from Cheniere Energy (S&P Platts)
    • Price spreads to Europe and Asia from the U.S. to Europe and Asia are strong and have allowed U.S. LNG facilities to run at or near full rates. However, high tanker rates have reduced netbacks
    • AEGIS notes LNG shipped from the U.S. does not appear to be canceled for lack of demand or bad pricing, like we saw this summer. Demand for LNG vessels is high enough to price a few voyages out of the market

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