February 16, 2021

February 16, 2021
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  • WTI is up 19c to $59.66/Bbl, and Brent is down 26c to $63.04/Bbl
  • West Texas Intermediate has since retreated below $60/Bbl after trading above the thirteen-month high overnight
    • There is about 1.7 MMBbl/d of refinery operations in the U.S. have halted and deliveries via pipeline suspend as freezing weather hits the Texas energy grid and blackouts spread to other states in the Central U.S. (Bloomberg)
    • As much as 3 MMBbl/d of processing capacity could be off-line, according to Energy Aspects
  • The frigid temperatures have also led to oil supply disruptions in the U.S. (Reuters)
    • Close to 1 MMBbl/d of U.S. oil production has been lost this week after freezing temps caused power cuts (Bloomberg)
    • The WTI prompt spread flipped to contango for the first time in a month – as of Tuesday morning
    • It is likely due to acute loss of demand from refinery shutdowns as the remainder of the curve remains in steep backwardation
  • Natural gas is up 18.9c to $3.101/MMBtu
  • Gas prices in the forward curve are up this morning, with the Summer ’21 strip above $3.
    • Gas for March delivery climbed 17c.
    • Concerns about supply spilled over into next winter, with Jan and Feb ’22 contracts up 8c.
  • Reduced gas production in West and South Texas has caused severe power and gas shortages in northern Mexico (Reuters)
    • On Monday, 4.77 million commercial and residential locations lost power, although state utility CFE said it restored power to 65% of users
    • Mexico president “AMLO” is seeking to limit dependence on foreign energy, and a CFE official cited the current events as “why Mexico must seek autonomy.”
  • U.S. gas production is down 16 Bcf/d; it dipped to 74 Bcf/d yesterday, down from near 90 Bcf/d earlier in the month (PointLogic)
    • AEGIS notes modeling gas production in the Texas plays is often difficult due to a small sample size of interstate pipelines; most pipelines receiving produced gas are intrastate and do not report daily nominations
    • Texas producing areas account for near 7 Bcf/d of the total curtailments

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