February 18, 2020

February 18, 2020
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  • WTI is down $1.05 to $51.00/Bbl, and Brent is down $1.23 to $56.44/Bbl
  • Continued fears over the impact on the global economy and fuel demand from China’s COVID-19 helped push oil prices lower this morning (Bloomberg)
    • Chinese refineries continue to trim processing rates and at least two trading houses have rented crude-oil storage tanks in South Korea as supply stacks up, according to Bloomberg
    • China’s oil stockpiles at ports rose to 60% of capacity, according to industry consultant Oilchem China
    • Markets have become overconfident in expecting a V-shaped rebound from the epidemic, according to Citigroup
  • Speculators increased their net-short position in WTI calendar spread options to the largest in five years last week (CFTC)
    • The net-long position stands at 124k contracts – the lowest since early November
  • The U.S. rig count was flat at 790 for the third week in a row (Baker Hughes)
    • Oil-directed rigs rose by two to 670
    • Oil rigs are down 179 from 857 a year ago
  • Natural gas is up 11.8c to $1.955/MMBtu
  • Natural gas prices jumped into the $1.90/MMBtu range on the emergence of colder-than-normal weather throughout the two-week forecast, as well as low holiday trading volume
    • The colder weather equates to an additional 30 Heating Degree Days
    • Should this cold pattern continue, the prompt-month contract could be aided by some additional short covering from speculators who hold a massive bearish position
  • The CFTC reported managed money short positions fell 10,206 contracts to total 494,913
    • Managed money long positions fell 25,315 contracts to total 163,365
  • TC Energy believes they can phase in their Villa-de-Reyes pipeline into service by the end of the year
    • The Tuxpan-Tula pipeline is still facing on-going disputes, but will be completed two years after consultations with the Mexican government are successfully completed
    • Once these two pipelines are complete, AEGIS expects stronger flows on the Sur-de-Texas pipeline

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