January 2, 2020

January 2, 2020
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  • WTI is up 5c to $61.11/Bbl, and Brent is up 21c to $66.21/Bbl
  • Banks have tightened oil and gas producer’s access to capital as fracking forecasts under-perform (WSJ)
    • In the past, banks have been the fuel for record growth, but now tighter credit is set to restrict production growth in 2020 and beyond
    • Oil and gas producers expect banks to cut their revolving lines of credit by 10% as a result of reserve reviews, according to a Haynes & Boone LLP survey
    • Some banks are discounting the value of reserves by 20% (PV20) versus the normal 10% – thereby reducing borrowing capabilities
  • President Trump said earlier this week that the U.S.-China Phase 1 trade deal would be signed on January 15th at the White House (Reuters)
  • Oil output from OPEC fell last month as cartel members position themselves for deeper cuts starting this month (Bloomberg)
    • Saudi Arabia, Iraq and the UAE led the reduction in production for December
    • The Bloomberg survey showed that Saudi Arabia was producing 9.83 MMBbl/d in December, on its way to the self-imposed quota of 9.7 MMBbl/d
    • Russia however, has hit a post-Soviet high of crude and condensate production despite pledges to reduce
  • Natural gas is down 1.3c to $2.176/MMBtu
  • NYMEX U.S. gas futures finished the year down 25.5%, marking the worst yearly performance since 2014
    • The CFTC also reported the number of contracts held short by managed money is around 75%, the highest level since September 2015
  • Warmer-than-normal temperatures continue to dominate the east coast in the 11-to-15-day outlook, keeping prompt-month gas prices below $2.20/MMBtu
    • Weather models subtracted 17 Heating Degree Days overnight
    • Analysts are also only expecting a small withdrawal of -67 Bcf for the week ending December 27
    • With production still humming above 95 Bcf, prompt-month prices could continue to face extended pressures (PointLogic)

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