December 8, 2020

December 8, 2020
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  • WTI is down 36c to $45.40/Bbl, and Brent is down 26c to $48.53/Bbl
  • Oil prices are trading slightly lower this morning
    • UAE exports to Asia slated to increase following OPEC+ agreement reached last week
    • OPEC production reaches its highest levels since a deal was reached in May as exempt members continue to increase output – threatening an already fragile market
  • The UAE eases its oil supply cuts to Asia following compromise reached at last OPEC+ meeting (Bloomberg)
    • The country will be allowed to produce an extra 38 MBbl/d
    • January shipments will be cut by 5-20% versus a 20% reduction for all grades loading in December
    • UAE output rose for the first time in three months during November
  • Libya’s increasing output pushes OPEC+ production to six-month high (Platts)
    • OPEC produced 24.54 MMBbl/d in November, up by 670 MBbl/d from October. This is the most OPEC has produced since reaching its historic deal in May
    • Exempt members, Libya, Iran, and Venezuela, added more than 600 MBbl/d in output during November
    • AEGIS notes that increasing output by countries exempt from OPEC+’s agreement may complicate further negotiations. The 600 MBbl/d increase during November would equate to around 33% of the 2 MMBbl/d of production OPEC+ is slated to return to the market in 2021
  • Natural gas is up 2.7c to $2.433/MMBtu
  • Natural gas for the January contract hit a 2020 low of $2.40/MMBtu on Monday as weather forecasts shifted warmer
    • January gas is now down $1.06/MMBtu from the October 21, 2020 high of $3.471
  • The amount of gas flowing into U.S. LNG facilities hit a new record of 11.5 Bcf/d according to Platts
    • Strong Asian spot pricing has helped U.S. LNG operate at or near capacity
    • Gas delivered into Northeast Asia, the price known as JKM, closed December 7 at $8.32/MMBtu. This was about four times the price of the LNG marker’s low of $1.825/MMBtu reached on April 28
    • AEGIS notes that some 175 cargoes across the U.S. were canceled earlier this year because of low international pricing and lower demand, according to ING
  • Weather models provided little net change over the past 24 hours with some cooler temperatures in the 6-10 day window but also some more warmth in the Northeast
    • The net effect was a loss of about 3 bcf over the next 15 days (Commodity Weather Group)
    • If we incorporate December forecasts, November-December 2020 period is lining up to be in the top five warmest on record, according to CWG
    • Commodity Weather Group notes that the history of super-warm winter start suggests that the first quarter of the new year should also run warm to very warm

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