December 30, 2020

December 30, 2020
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  • The deterioration in the value of the dollar (DXY – Dollar Spot Index) has helped support oil prices over the past several days (Bloomberg)
    • The Bloomberg Dollar Index has now reached its lowest point since April 2018 and is currently trading near 89.69
    • The dollar has been pressured by negative sentiment surrounding the COVID-19 stimulus package, with the index falling by 56 pips since the announcement
  • Colorado confirms the first COVID-19 variant-B.1.1.7 case in the United States (Reuters)
    • The new strain has been wreaking havoc in London as more than 16 million citizens have been forced to stay at home to mitigate the spread
    • The B.1.1.7 strain is reported to be up to 70% more contagious, though the virus effects mirror that of the original strain
    • COVID cases doubled in London over the past week, with over 60% of the new cases attributed to the new strain, according to government statistics
  • EIA weekly data is due at 9:30 am CST
    • U.S. Crude Inventories: – 2,449 MBbls (Avg. Bloomberg surveys)
    • U.S. Gasoline Inventories: + 212 MBbls
    • U.S. Distillate Inventories: – 402 MBbls
    • U.S. Refinery Utilization: + 0.38% change
  • The February 2021 contract is now prompt after the January 2021 contract rallied approximately $0.17/MMBtu yesterday during its final day of trading
    • The remaining winter months for 2021 are still facing pressure from warmer-than-normal temperatures as we head into peak winter and any call skew has all but disappeared
    • However, pricing for 1Q2022 is a bit more favorable for costless collars as you gain nearly 2:1 upside versus downside participation
  • China’s state-owned oil company CNOOC leads group in LNG purchase on the Shanghai Petroleum and Natural Gas Exchange (Reuters)
    • The exchange recently launched a new option for groups to purchase LNG tenders that allow smaller firms to participate in purchasing of a larger cargo. Each group has a “leader” who is responsible for shipping and distribution and must own an LNG terminal to receive shipments
    • China National Offshore Oil Corp (CNOOC) has purchased a 120,000-tonne LNG cargo that it will be responsible for shipping and distribution to the larger group
    • China is the second largest LNG importer in the world behind Japan and is seeking to create an Asian benchmark for LNG through their Shanghai exchange
  • Waha prompt-month contract settles in positive territory for the first time since 2015
    • Significantly colder weather is expected in the West Texas area through the new year, increasing demand in the surrounding area. During the last major West Texas cold front, supply outages totaled 2 Bcf/d (Platts)
    • Price has also been supported by the completion of short-term maintenance on EPNG’s Line 2000 segment from Afton to Lordsburg

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