January 13, 2020

January 13, 2020
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  • WTI is down 6c to $58.98/Bbl, and Brent is down 2c to $64.96/Bbl
  • Protesters in Iran took to the streets for a third day of demonstrations after the government acknowledged shooting down a passenger plane by accident (Reuters)
    • Prior to Iran admitting it shot down the plane, the country was mostly united and rallied around each other in support of the assassinated General Qassem Soleimani
    • Iran’s leaders now face internal backlash for shooting down the Ukrainian jetliner that killed 176 people
    • Videos showed students chanting slogans including “Clerics get lost!” outside universities in Tehran
  • The US rig count fell by 15 to 751 last week, accelerating the pace of declines (Baker Hughes)
    • Oil-directed rigs fell by 11 to 659, the sharpest drop since October
    • Gas rigs fell by four to 119
  • Western Canada Select’s (WCS) discount to WTI widened $1.20 to -$24.08/Bbl on Friday – the widest settlement since December 2018
    • A reduction in transit capacity and a recovery in Canadian production has helped push prices lower
    • Storage levels in Alberta are close to full (Bloomberg)
    • At its worse, WCS traded at a -$50/Bbl discount to WTI in October of 2018, right before the Canadian government mandated supply cuts
  • Natural gas is up 0.4c to $2.206/MMBtu
  • The CFTC reported that short positions increased by 24,716 contracts to total 398,026 contracts
    • Long positions increased by 15,475 contracts to total 147,610 contracts
    • Short interest has only been at these levels twice in the last 15 years, those years were 2008 and 2015
  • Natural gas prices are flat following Friday’s settle as the two main weather forecasting models currently disagree about the possibility of a late-month emergence of Arctic weather
    • The Commodity Weather Group currently assigns a 46% chance of noticeably colder-than-normal temperatures moving through the Midwest and Northeast
    • While the severity of the temperature change is up for debate, confidence is high that a flip will occur
  • There is the potential for pipeline constraints to emerge in the East Texas and Louisiana Gulf Coast markets this summer as demand is forecasted to rise by approximately 4 Bcf (Platts)
    • The vast majority of this demand, 3.5 Bcf/d or so, is set to come from LNG facilities ramping up their final trains
    • North to southbound pipeline capacity in Louisiana is calculated to have roughly 1 Bcf/d of incremental capacity available
    • The Gulf Coast also has to contend with the 2 Bcf/d of gas flowing from the Permian on the Gulf Coast Express

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