January 17, 2020

January 17, 2020
Print Friendly, PDF & Email
  • WTI is up 30c to $58.82/Bbl, and Brent is up 35c to $64.97/Bbl
  • Oil is hovering just under $60/Bbl as signs of plentiful supply offset the “Phase 1” trade deal agreement
    • The trade deal supports a revival in global manufacturing, thereby stronger oil demand growth (Bloomberg)
    • A positive outcome on the trade war front is yet to be enough to counter what many agencies see as a supply glut in at least the first half of 2020
  • The U.S. Senate approved the US-Mexico-Canada free trade agreement (USMCA)
    • President Trump is expected to sign the legislation shortly, according to the White House
    • The USMCA is not expected to have much effect on for the North American energy sector
    • Canada still needs to ratify the deal
  • Western Canada Select’s (WCS) discount to WTI widened just over a dime to -$24.65/Bbl on Thursday, the weakest since late November 2018
    • On Wednesday, Bloomberg reported that an arctic blast hitting Western Canada is weighing on the price of heavy crude
    • Temperatures in -22 F° and below was cold enough to render heavy crude rock solid
    • To transport, producers must blend in more product like condensate or C5, therefore reducing how much WCS can be shipped to market
  • Natural gas is down 4.8c to $2.029/MMBtu
  • Prompt-month gas prices stand at $2.03/MMBtu as overnight weather models subtracted 35 Heating Degree Days (HDD) overnight
    • This massive degree day loss follows up Tuesday’s 30-HDD loss, which, at the time, was the largest 24-hour demand loss of the winter
    • European weather models currently have a 155-HDD range between their warmest and coldest forecasts
    • The February contract is nearing its lowest close since 2016
  • Global LNG markets could be under pressure as Japan and South Korea shift towards restarting idled nuclear power plants in an effort to claim some semblance of energy independence (Bloomberg)
    • China’s demand prospects are also being revised lower from both residential and industrial sectors as the economy continues to lag
    • Global supply is set to increase significantly from the U.S., Australia, and Qatar which could further saturate an already oversupplied Asian market
    • JKM spot prices, the Asia benchmark, could see prices drop as low as $3/MMBtu as significant supply outpaces weak demand abroad
    • Low international prices pressure current LNG infrastructure projects that are still pre-FID
  • Both Freeport and Kinder Morgan’s Elba LNG facility had their second trains cleared for service
    • LNG feedgas demand fell to 6.6 Bcf as IHS noted reductions from Cove Point, Freeport, and Sabine

Access Our Deeper Market Insights

Product Factor Matrix

Proprietary view of priced-in factors driving the market vs. potential bullish and bearish surprises.

Learn More

Trading Recommendations

Clear trading recommendations based on real market opportunities that enable clients to take action.

Learn More

Market Data

A comprehensive suite of the latest curves, spot pricing, settles, and strips to drive confident hedging decisions.

Learn More

Benchmarking and Trade Analytics

Real-time access to analyze your hedging strategy against AEGIS benchmarks and current market activity.

Learn More