December 4, 2019

December 4, 2019
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  • WTI is up 97c to $57.07/Bbl, and Brent is up $1.14 to $61.96/Bbl
  • Construction has begun on the much needed 590 MBbl/d Trans Mountain crude pipeline expansion, offering relief for Canadian producers
    • The expansion would increase pipeline capacity from Edmonton, Alberta, to Burnaby, British Columbia, boosting the total system capacity to 890 Mbbl/d
    • Canadian crude oil has faced deep discounts to WTI due to lack of pipeline takeaway capacity
    • The much delayed project should be complete in 3Q2022
  • Oilfield services company Halliburton plans to shed more than 800 US workers as part of a restructuring plan to lower costs (Argus)
    • The company is responding to reduced activity in Oklahoma as part of a consolidation
    • CEO Jeff Miller in October said he expects a further deceleration in drilling and well completion in the final months of the year
    • Active rigs in Oklahoma have dropped from 145 a year ago to 51 as of the latest Baker Hughes report
  • EIA weekly data is due at 9:30 AM CST
    • U.S. Crude Inventories:                  –     1,486 MBbls (Bloomberg surveys)
    • U.S. Gasoline Inventories:             +     1,469 MBbls
    • U.S. Distillate Inventories:             +        327 MBbls
    • U.S. Refinery Utilization:               +    0.84% change
  • Natural gas is down 3.1c to $2.410/MMBtu
  • Prompt month natural gas prices remain volatile due to their continued sensitivity towards the major weather forecast model outlooks
    • After rallying all the way back from Friday’s steep losses yesterday, the January contract is once again trending lower likely due to profit taking and a small loss of Heating Degree Days in last night’s forecast
    • This is the lowest the January contract has traded since 2015
  • The slump in Asian LNG spot prices may continue through the winter according to the CEO of SK E&S (Bloomberg)
    • Spot prices in Asia continue to trend downwards during a period of time when they are supposed to rise given winter demand
    • As the arbitrage to Asia continues to get compressed, many marketers are unloading spot cargoes in Northwestern Europe at a record rate and subsequently eroding prices there as well
    • While spot prices are collapsing, oil-linked LNG contracts, which make up three fourths of long-term deals, have maintained in the $9 to $10/MMBtu range
      • The contrast between the two contracts may encourage buyers to negotiate new terms, placing further hardships on facilities working towards a Final Investment Decision

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