- U.S. crude production will stay below pre-Covid levels according to the Energy Information Administration (EIA) said in its monthly Short-Term Energy Outlook (STEO)
- U.S. production will be down the next two years from record highs of 12.25mm bbl/d in 2019 but will rise to 11.1mm bbl/d in 2021 and 11.5mm bbl/d in 2022, with most of the growth occurring in the Permian basin
- WTI will average $49.70/bl in 2021, up by nearly 9c from the previous forecast
- Global consumption of petroleum fuels averaged 92.2mm bbl/d in 2020, down by 9.0 mm bbl/d from 2019. The EIA expects global liquid fuels consumption will grow by 5.6mm bbl/d in 2021 and 3.3mm bbl/d in 2022
- Winter freeze in Asia prompt utility companies to acquire spot supplies of fuel oil
- Goldman estimates oil demand will see a 1MMBbl/d boost in the coming weeks, with potential for 1.5 MMBbl/d if TTD prices reach $10/MMBtu
- Fuel oil shipments at Japanese ports have risen about 38% year-over-year, thus far in January
- Saudi Arabia reduced crude shipments to at least 11 refiners in Asia
- The kingdom cut supplies by 20-30% in some instances, as new compensatory cuts begin to take place
- The move comes as Asian refiners near their peak refinery maintenance or turnaround season, reducing the need for supplies. Additionally, a resurgence in COVID-19 cases has weighed on demand
- EIA weekly data is due at 9:30 am CST
- U.S. Crude Inventories: – 1,930 MBbls (Avg. Bloomberg surveys)
- U.S. Gasoline Inventories: + 2,609 MBbls
- U.S. Distillate Inventories: + 2,242MBbls
- U.S. Refinery Utilization: + 0.00% change
- Higher Dominion South prices in the Appalachia have helped lift regional production near record-highs so far in January as producers receive their highest price since November 2019 (S&P Platts)
- Dom S. cash prices have climbed to $2.44/MMBtu in January 12 trading, up nearly 50c from late December. Futures for Dom S. are now averaging $2.27/MMBtu for January, February, and March – the highest since November
- The region’s gas demand in January has helped pull down on inventories and narrow the gap to the five-year average
- AEGIS notes that while the remainder of the Dom S. strip has greatly improved with cooler seasonal weather, the Summer strip (Apr-Oct) has remained near -70c to Henry Hub since November
- The U.S. Energy Information Administration is expected to report a 128 Bcf withdrawal for the week ended January 8, according to average analysts estimate from Bloomberg
- The survey ranges from -141 on the low end to -120 for the most bearish estimate
- A 128 Bcf pull on storage would be above the 90 Bcf withdrawal reported last year, but below the five-year average draw of 161 Bcf
- A higher baseload of demand, mostly due to LNG increases, has helped some U.S. storage regions trend tighter than the five-year average despite the warm winter so far (Platts)
- The EIA will release its gas data on January 14
