January 12, 2021

January 12, 2021
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  • Oil reaches new ten-month high during this morning’s trading session
    • The dollar index (DXY)reversed yesterdays gains, losing an additional ten pips to trade near $90.464
    • OPEC+ compliance reaches its lowest since the latest round of supply cuts began last May
  • Heavy Canadian crude grades surge on supply outage suspicions (Bloomberg)
    • Western Canadian Select Basis (WTI @ Cushing) pricing tightened by $1.35/Bbl, to $13.40/Bbl, its highest since December
  • Kansas City Fed survey shows drilling activity was up in 4Q2020
    • The drilling and business activity index reported by the fed jumped from 4 in 3Q2020 to 40 in 4Q2020 as producers become more optimistic about the impact of a successful vaccine rollout on oil markets
    • Survey respondents, on average, expect WTI prices to hit $48/bl in six months and $52/bl at the end of the year
    • The CapEx index jumped from -14 to 9 in 4Q2020
  • Natural gas flowing into U.S. LNG facilities remains near capacity as spot prices for deliveries to Northeast Asia approach a whopping $30/MMBtu (Platts)
    • The JKM benchmark hit its record high spot price of $30 only nine months after reaching a record low
    • AEGIS notes that JKM futures for April to December 2021 are lower at around $7/MMBtu
      • The acute cold in Asia and astronomical shipping cost, due to low availability of LNG specific vessels, have contributed to January and February JKM prices soaring
  • Weather forecasts show a gain of 5.7 gas weighted HDDs (~10 bcf) in the past 24-hours as cooler temperatures spread across the Great Plains, Texas and Southeast U.S. (CWG)
    • January currently ranks on the warmer side for the past 20 years in terms of total heating degree days (HDDs) – a measure of demand
    • Commodity Weather Group (CWG) has January pegged at about 875 HDDs including current forecasts, about 40 HDDs less than the 10 year normal and 80 HDDs less than the 30 year normal
    • The meteorologist allot a 60 HDD spread range from about 840 (still a top ten warm month) to 900 on the high side for January
    • For reference, the coldest January in the past 20 years was 2014 at about 1040 HDDs and the warmest was 2006 at about 715 HDDs

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