February 4, 2020

February 4, 2020
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  • WTI is up $1.05 to $51.16/Bbl, and Brent is up 81c to $55.26/Bbl
  • The U.S. oil benchmark is nearly 2% this morning amid hopes for further output cuts from OPEC+ to counter demand losses from the Chinese coronavirus outbreak
    • WTI had hit a low of $49.66 in early morning Tuesday trading – a $15/Bbl drop in just one month
    • BP’s CFO Brian Gilvary said the economic slowdown brought on by the virus will reduce oil consumption for the whole year by 300 to 500 MBbl/d, roughly 0.5% of global demand (Reuters interview)
  • OPEC and non-OPEC Joint Technical Committee (JTC) members will hold an extraordinary meeting in Vienna on 4-5 February
    • The special assembly will take place to asses and address the potential impact of the coronavirus (Argus)
    • The OPEC+ JTC is a sub-committee of the broader group that monitors market conditions to advise the group’s production strategy
    • OPEC+ scenarios raise possible output curbs to 800 – 1 MMBbl/d. A cut of 500 MBbl/d had been the initial rumor (Bloomberg)
  • Natural gas is up 1.7c to $1.836/MMBtu
  • The 11-to-15-day outlook is trending cooler for the Western and Midwestern portions of the United States, but this has been known to quickly turn warmer
    • Commodity Weather Group’s 712 HDD forecast for February 2020 places it as the sixth warmest February in the past 20 years
    • A further loss of 25-30 HDDs, from today’s current HDD count, would place February 2020 as one of the top-10 warmest February of all time
  • Waha basis has seen a sharp drop over the last several days as the discount fell $-0.50 to $-1.94
    • This plunge appears to be limited to the prompt-month as strips further out along the curve have had little reaction to the front’s movement
    • Nearby basis curves, such as CIG or NGPL Midcon, appear to have not been impacted either

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