February 24, 2021

February 24, 2021
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  • WTI is up 32c to $61.99/Bbl, and Brent is up 49c to $65.86/Bbl
  • Texas driller restore 80% of crude output following last week’s freeze
    • Production in the Permian Basin in Texas is at about 2.9 MMBbl/d, up from 600 MBbl/d during the height of the storm, according to OilX. The region typically produces around 3.5 MMBbl/d
    • The recovery comes after grid operators restored power across much of the state. Occidental petroleum, the Permian’s second-largest producer, said that 90% of its output is back online on Tuesday
  • Keystone XL pipeline cancellation prompts interest in crude-by-rail
    • Oil export by rail has tripled since July, and the trend is expected to continue after the Biden Administration killed the pipeline
    • Gibson Energy Inc, an oil transportation company, signed a 10-year contract with ConnocPhillips to process oil-sands crude before loading it on crude train terminals
    • With the Keystone Pipeline canceled, Western Canadian crude will likely have to be discounted even more to account for the increased transportation cost
  • EIA weekly data is due at 9:30 am CST
    • U.S. Crude Inventories: – 6,742 MBbls (Avg. Bloomberg surveys)
    • U.S. Gasoline Inventories: – 3,515 MBbls
    • U.S. Distillate Inventories: – 4,718 MBbls
    • U.S. Refinery Utilization: – 6.99% change
  • Natural gas is down 2.8c to $2.851/MMBtu
  • Natural gas in storage is expected to show a 333 Bcf drop when the EIA reports data on Thursday for the week ended February 19, according to Platts estimates
    • If accurate, it would be the second-largest draw on record, and only the second weekly draw to register over 300 Bcf
    • A polar vortex dipped down deep into the southern U.S. and Texas last week, causing large swings in demand and resulted in production outages
    • The large swings added to the difficulty of predicting last week’s gas withdrawal as economist estimates range from a low of -301 Bcf to a high of -347, according to Bloomberg data
  • The Mountain Valley Pipeline (MVP) is looking at amending its current FERC application and says it remains on schedule for completion by the end of 2021 (Equitrans)
    • Following through on a promise to revamp its permitting process in late January, MVP filed an abbreviated application at FERC to use trenchless water crossings methods at 120 locations to cross 181 water bodies and wetlands (Roanoke Times)
    • The new individual and more complicated permit process is expected to push completion of the pipeline well into next year according to Height Capital Markets, an IB firm that is closely following the project
    • MVP will be a 303-mile, 2 Bcf/d natural gas project, connecting Appalachia to Mid-Atlantic markets
  • Dry gas production in the Lower 48 has nearly fully recovered to pre-freeze off levels of early February (PointLogic)
    • NG production stands at 89.3 Bcf/d as of February 24, compared to 90.6 Bcf/d on February 8
    • Texas is still being modeled as producing at a lower level of 20.8 Bcf/d versus February 8 volumes of 22.1 Bcf/d, according to PointLogic data
      • AEGIS notes that Texas production can be difficult to calculate in real-time due to the low sample size and abundance of intrastate pipelines that do not have to report nominations

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