December 23, 2020

December 23, 2020
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  • Oil rally and fuel glut push Asian refiners’ margins below break-even
    • Asian demand has rebounded sharply from its lows reached in April; Still, a large glut of product stocks remains as inventories in the East of Suez region are at their highest levels since June, according to Bloomberg
    • The rally in crude prices has caused further strain on Chinese refinery margins as processing costs have risen. Complex refining margins in the Asian oil hub of Singapore, a proxy for the region, fell from $1.22/Bbl at the end of October to as low as -2 cents earlier this month, according to Bloomberg
  • President Trump signals he may not sign the stimulus bill, describing it as “wasteful spending”
    • The sitting president targeted the stimulus checks under the current legislation, saying they should be changed from $600 to $2,000. House Speaker Nancy Pelosi (D-CA) lauded the initiative and said Democrats would be ready to pass the measure unanimously later this week
    • President Trump has not said whether he would veto the bill, though the late change in the administration’s position will likely complicate the package’s future
  • EIA weekly data is due at 9:30 am CST
    • U.S. Crude Inventories: – 2,899 MBbls (Avg. Bloomberg surveys)
    • U.S. Gasoline Inventories: + 248 MBbls
    • U.S. Distillate Inventories: – 1,538 MBbls
    • U.S. Refinery Utilization: + 0.52% change
  • Strong LNG and ResComm demand combined with lower U.S. natural gas production last week, likely resulted in another gas storage withdrawal of over 100 Bcf in mid-December
    • A survey of analysts expect the EIA to report a 162 Bcf withdrawal from inventory for the week ended December 18 (Bloomberg)
    • The EIA plans to release its storage report one day early this week at 9:30 CT on December 23, 2020
    • A 162 bcf draw would be about 30 bcf greater than the five-year average
  • Permian gas flows are shifting as associated gas production has been reduced and new infrastructure starts service
    • A 3.8 Bcf/d or about 30%, decline in Permian gas production came as the oil-market crumbled in 2020 (Platts)
    • Lower pipeline utilization rates, in combination with higher Waha gas prices, have and are changing Permian market dynamics, according to Platts
    • Gas flows out of Waha have seen a reduction in flows headed North, the market of last resort for some producers in the Permian
    • The start-up of Kinder’s Permian Highway Pipeline has recently added 2.1 Bcf/d of capacity from Waha to the Houston area

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