February 20, 2020

February 20, 2020
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  • WTI is up 42c to $53.71/Bbl, and Brent is up 21c to $59.33/Bbl
  • Oil near one-month highs as Brent crude continues its longest uninterrupted run of gains since January 2019
    • The oil complex is hopeful that Chinese economic stimulus will cushion fuel demand from the impact of the viral outbreak (Bloomberg)
    • China cut its benchmark lending rate on Thursday and only reported 349 new confirmed cases in Hubei province on Wednesday, the lowest in more than three weeks
  • Prices are also supported by new American sanctions on Rosneft’s trading arm that could impede shipments from Venezuela
    • Venezuela’s oil production fell to 750 MBbl/d last month, according to Argus
    • The OPEC nation’s production has already fallen by 450 MBbl/d from January 2019 when the U.S. imposed sanctions that prohibited imports of Venezuelan crude into the U.S. (Argus)
    • AEGIS notes that the combination of possible lower Venezuelan exports and the continued reduction in Libyan production has help offset some demand loss from the coronavirus
  • EIA weekly data is due at 10:00 AM CST
    • U.S. Crude Inventories:                  +     2,824 MBbls (Bloomberg surveys)
    • U.S. Gasoline Inventories:             +        225 MBbls
    • U.S. Distillate Inventories:             –     1,297 MBbls
    • U.S. Refinery Utilization:               –     0.50% change
  • Natural gas is down 1.1c to $1.944/MMBtu
  • Analysts estimate a withdrawal of -141 Bcf for the week ending February 14, this would be less than the -163 Bcf withdrawal in the corresponding week last year
    • Estimates ranged from a draw of -121 Bcf to a draw of -154 Bcf
    • A withdrawal within this range would contract the five-year average to 210 Bcf
  • Shell sees the LNG market well-supplied into the middle of 2020, but things could balance out by the end of the year (Bloomberg)
    • Despite the oversupplied market, volumes that were supposed to go to China are being picked up by other countries such as India or South Korea
    • Europe absorbed roughly 90% of LNG growth in 2019, but southern Asia and South America could be set to provide some relief moving forward

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