December 9, 2020

December 9, 2020
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  • WTI is up 49c to $46.09/Bbl, and Brent is up 58c to $49.42/Bbl
  • Oil prices are trading slightly higher this morning as the market awaits last week’s storage numbers
    • The EIA released its December STEO report, which includes several key revisions as some insight into how the market will look in 2021 has shaped up
    • The American Petroleum Institute (API) reported a 1.14 MMBbl build for the week ending December 4, in contrast with the estimated draw of 1.5 MMBbl. The EIA is scheduled to release storage stats later this morning
  • The EIA revised production, price forecast in its latest STEO report
    • U.S. oil production is forecast to fall by 910 MBbl/d in 2020, in contrast with the previous estimate of an 860 MBbl/d decrease
    • The EIA also lifted its WTI price forecast for 4Q2020 and 1Q2021 by $2.82/Bbl and $4.28/Bbl, to $41.63/Bbl and $44.50/Bbl, respectively. The large increase comes in response to the December 3 OPEC+ meeting, according to the agency
    • The EIA said, “Partly because of EIA’s forecast of more restrained OPEC+ production in 2021, EIA forecasts tighter oil markets next year, particularly in the first quarter. EIA now forecasts first-quarter 2021 global oil inventory draws to average 1.8 million b/d, which is 1.0 million b/d more than previously forecast.” In an accompanying note
  • EIA weekly data is due at 9:30 am CST
    • S. Crude Inventories: – 849 MBbls (Avg. Bloomberg surveys)
    • S. Gasoline Inventories: + 1,977 MBbls
    • S. Distillate Inventories: + 789 MBbls
    • S. Refinery Utilization: + 0.50% change
  • Natural gas is up 10.5c to $2.504/MMBtu
  • Kinder Morgan’s Permian Highway Pipeline (PHP) is now fully operational after facing opposition to its construction through the Texas Hill Country (NGI)
    • The pipe is moving associated gas volumes from the Permian basin in west Texas to Katy, outside of Houston, with connections to the Gulf Coast and Mexico, according to Natural Gas Intelligence
    • On November 1, PHP was mechanically complete and the 2.1 Bcf/d pipeline is slated for full in-service in early 1Q 2021
  • The Energy Information Administration (EIA) lowered its estimates of natural gas demand and pricing in its latest monthly short-term energy outlook
    • In its report, the agency cut its fourth-quarter forecasts for consumption by 1 Bcf/d and spot market prices by $0.27/MMBtu
    • Looking into 2021, the EIA expects total U.S. consumption to average 79.4 Bcf/d, down almost 5% from 2020
    • “The forecast decline in 2021 results from rising natural gas prices that lower power demand,” the report said
    • The government agency also noted that dry gas production will average 90.9 bcf/d in 2020 and supply should average 87.9 Bcf/d in 2021

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