December 9, 2019

December 9, 2019
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  • WTI is down 79c to $58.41/Bbl, and Brent is down 65c to $63.74/Bbl
  • Attention has quickly turned back to the U.S./China trade war following OPEC+’s decision to make deeper supply cuts on Friday
    • Oil prices are down this morning from nearly the highest close in 12 weeks on Friday
    • Saudi Arabia was the catalyst for the new supply cut deal, pledging to voluntarily produce 400 MBbl/d less than mandated by the cartel, translating to total overall curbs for the group of 2.1 MMBbl/d
    • A more detailed breakdown of Friday’s OPEC+ agreement is available for clients in our Market Summary, published on Friday
  • Speculators heavily misjudged the outcome of the OPEC+ meeting in Vienna last Thursday and Friday
    • In the week ending December 3, hedge funds reduced long bets on crude oil while also increasing shorts
    • Net-long positions fell by 48k contracts to 150k from a nearly 200k net-long position
  • Oil-directed rigs fell by five to 663 last week in their seventh straight weekly decline  (Baker Hughes)
    • Texas lost the most total rigs at five
  • Natural gas is down 11.0c to $2.224/MMBtu
  • Prompt-month natural gas prices are opening in the low $2.20s/MMBtu as major weather models signaled mild weather conditions in the 11-to-15-day forecast
    • Major weather models lost 21 Heating Degree Days over the weekend, which is roughly equivalent to losing 37.8 Bcf of demand
    • While there may still be pockets of cold over the next 15 days, it is no longer likely that there will be an extended threat of Arctic cold for December
  • Managed money short positions are nearing 52-week highs, coming in at 341,495 total contracts
    • Long positions are sitting near 52-week lows at 114,073 total contracts
    • While weather models are weighing on prompt month gas prices, a bullish surprise in forecasts could send prices higher due to the heavy concentration of shorts
  • Freeport’s Train 2 is officially producing LNG
    • LNG feed gas demand finally breached the 8.0 Bcf/d mark, coming in at 8.25 Bcf/d on Sunday
    • LNG feed gas should continue to average near the 8.0 Bcf/d mark as Freeport and Cameron LNG’s second trains become fully operational over the next several months

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