January 19, 2021

January 19, 2021
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  • IEA revises oil demand forecasts as renewed lockdowns threaten any meaningful recovery
    • The IEA cut its 1Q2021 estimate by 600 MBbl/d, however, the agency still foresees a massive drawdown in global inventories of 100 MMBbls
    • The agency forecasts that consumption will increase by 5.5 MMBbls, in contrasts with its previous estimate of a 5.8 MMBbl recovery
  • Coronavirus infections flare up in mainland China, threatening the oil demand outlook (Bloomberg)
    • Some independent refiners have already been forced to cut crude processing rates as fuel demand has dwindled in recent weeks
    • AEGIS notes that the China situation will be monitored by market participants very closely, as the country was the only major economy to expand during 2020 and served as a bulwark for oil demand
  • The Baker Hughes oil rig count gained ten rigs to bring the total gas rig count to 287
    • The major basins, Permian, Eagle Ford, and Denver-Julesburg, added 10, 2, and 2 rigs, respectively
  • Natural gas buyers in China have reduced purchases of high-priced spot LNG for February deliveries as they are unable to pass the high costs on to end-users (Platts)
    • This comes as Northern China is experiencing energy shortages and efforts to supply its own electricity market with enough piped gas, coal, and LNG imports
    • China’s LNG imports hit a record high in December 2020 of almost 8 Million metric tons. For reference, China’s 2018 and 2019 peak LNG imports reached ~6.2 and 7 MMT respectively
    • The Platts JKM (Japan Korea Marker) for spot delivery into North Asia hit a record high of $32.50/MMBtu this week. “Chinese second-tier buyers are trembling just looking at the price surge each day; no one will buy at this level,” a Shenzhen-based end-user told S&P Global
  • Gas production in the Bakken remains strong despite the region’s rig count remaining flat over the past three months (Williston Herald)
    • The completion of Outrigger Energy II’s latest processing plant stands add to the gas capture rate
    • The company announced this week that it finished construction of the Bill Sanderson Gas Processing Plant and pipelines, only eight months after workers broke ground
    • About 250 MMcf/d of gas can be processed by the new plant
    • The plant has direct market access to the Northern Border Pipeline system for residue gas and the ONEOK NGL pipeline system for natural gas liquids

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