February 10, 2021

February 10, 2021
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  • Crude futures are up this morning, extending their longest run of gains in over two years
    • The world’s largest independent oil trader, Vitol Group, has said that crude prices have more room to run as global stockpiles become depleted
    • Oil prices have been pushed higher by declining inventories, and the reported draw of 3.5 MMBbls added to the positive sentiment surrounding crude prices. The EIA will release its official storage numbers at 0930am
  • Vitol says oil prices have room to rise further as stockpiles shrink
    • Firming oil demand is reducing global inventories, with at least 500 MMbbls being pulled from storage during 1H2021, according to Vitol
    • The IEA said it expected inventories to fall by 100 MMBbls in 1Q2021, while OPEC has said inventories will reach their five-year-average by August
  • EIA weekly data is due at 9:30 am CST
    • U.S. Crude Inventories: – 177 MBbls (Avg. Bloomberg surveys)
    • U.S. Gasoline Inventories: + 1,892 MBbls
    • U.S. Distillate Inventories: – 1,488 MBbls
    • U.S. Refinery Utilization: – 0.23% change
  • Natural gas output and demand to fall for the second year in a row according to EIA’s monthly STEO report
    • After averaging 91.3 Bcf/d in 2020 and an all-time high of 93.1 Bcf/d in 2019, the EIA forecasts that natural gas production will drop to 90.5 Bcf/d in 2021 and 91.0 Bcf/d in 2022
    • Projected U.S. power consumption will rise by 1.6% in 2021 and 1.7% in 2022 after falling 3.8% in 2020
    • EIA forecasts the share of electric power generated by natural gas in the U.S. to decrease from 39% in 2020 to 37% in 2021 and to 35% in 2022, conceding market share to both coal and renewables
  • A solid draw could potentially flip the storage from surplus to deficit for the first time in two years (Platts)
    • The EIA is expected to report a 175 Bcf withdrawal from storage on Thursday, according to the average Platts analyst estimate
    • A 175 Bcf pull would be nearly 54 Bcf more than the 121 Bcf withdrawal observed last year as well as the five-year average draw of 125 Bcf
    • If this injections forecast holds, the prevailing overhang to the previous year will flip to a 13 Bcf deficit, marking the first time storage volumes dropped to a deficit compared to the year previous in two years
  • Fog Disrupts LNG traffic in the U.S. Gulf Coast
    • Traffic at LNG terminals was disrupted as heavy fog swept across the southwest Louisiana area, disrupting port operations as feed gas volumes to U.S. terminals dipped Tuesday to 10.56 Bcf from 11.28 Bcf on Monday. The lowest volume in two weeks
    • Foggy conditions are expected to continue through Thursday
    • The fog primarily affected Cheniere Energy’s Sabine Pass Liquefaction, as feedgas deliveries showed 3.4 Bcf/d on Feb. 9, down more than 666 MMcf/d from the day before (Platts)
    • LNG arbs narrowed as TTF was down $0.32 to $6.790 and JKM fell $0.125 to $8.305 for March deliveries

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