December 30, 2019

December 30, 2019
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  • WTI is up 37c to $62.09/Bbl, and Brent is up 62c to $68.78/Bbl
  • Oil prices have reached their highest level since attacks on Saudi oil infrastructure in September
    • Geopolitical tensions rose in the Middle East after the U.S. targeted five locations in Syria and Iraq
    • Prices have risen more than 20% this year after starting 2019 in the mid-40’s for WTI
    • Deeper OPEC cuts and a pending U.S.-China trade deal has pushed oil to multi-month highs
  • U.S. crude inventories fell by 5.5 MMBbl to 441.4 MMBbl for the week ending December 20, helping buoy price (EIA)
    • Oil prices reacted positively after the government report showed the larger than expected withdrawal
    • The EIA reported oil statistics on Friday instead of the normal Wednesday reporting, due to the holiday week
  • The U.S. rig count fell by eight to 805 last week, according to Baker Hughes
    • Oil rigs led the decline, falling by eight to 677
  • Natural gas is down 1.6c to $2.215/MMBtu
  • December 2019 is estimated to be the sixth warmest December of all-time, according to Commodity Weather Group, coming in at 764 population-weighted Heating Degree Days (HDDs)
    • The 30-year HDD normal for December is 867, the 10-year normal is slightly lower at 831
    • In 70% of years with warm Decembers, since 2000, the proceeding January tends to be warm as well, placing further downside risk for prompt-month gas prices
  • Waha spot prices briefly went negative ahead of the weekend due to unplanned maintenance on the Sur de Texas pipeline, but settled at $0.27/MMBtu as of Friday (PointLogic)
    • The Permian basin is also testing record high production levels of over 12 Bcf/d
    • Mild-to-warmer temperatures in North America could continue to suppress demand from Mexico; a lack of takeaway capacity until 2021 and surging basin production also put a cloudy outlook on Waha prices
  • The EIA reported a withdrawal of -161 Bcf for the week ending December 20
    • Despite the bullish withdrawal, trading following the announcement was flat and the January contract settled at $2.15/MMBtu
    • The winter strip is at lows not seen since the winter of ’15/‘16

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