January 21, 2021

January 21, 2021
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  • J.P. Morgan (JPM) cut its Chinese demand forecasts as new lockdowns emerge due to the country’s latest coronavirus surge
    • Chinese oil demand was cut by 60, 150, and 113 MBbl/d in January, February, and March, respectively
    • JPM’s February gasoline demand forecast was also revised by (-)200 MBbl/d
  • Libya is seeking foreign investment to help repair ailing infrastructure
    • Libya’s state-owned NOC was forced to shut down a leaking pipeline last Saturday, causing the country’s crude production to drop by 200 MBbl/d
    • Libyan output has fallen to near 1 MMBbl/d as a result – it’s lowest in over two months. Libya had previously ramped up production at a rapid clip reaching 1.3 MMBbl/d, however many of the infrastructure ailments have been revealed during the ramp-up
  • Joe Biden issued a flurry of executive orders on Inauguration day, among them a moratorium on leasing in the Artic National Wildlife Refuge and a commitment to rejoin the Paris Climate Accord within 30 days
    • The moves marked a dramatic rebuke from the previous administration’s pro-energy stance, with environmentalists lauding the move
    • AEGIS notes that while these orders may not have an immediate impact on price, it marks a stark reversal in the regulatory climate that the industry will face in the coming years
  • Prompt month natural gas has been at the whims of weather model changes and yesterday was a good example
    • The February contract on Wednesday was trading down about 10c to ~$2.45/MMBtu in the morning, but regained all early losses to settle nearly unchanged on Wednesday
    • Mid-day weather model runs signaled a move away from warmth that covered much of the eastern Lower-48
    • Bottom line is weather models are exceptionally volatile right now from run to run and gas prices are flipping on a dime
  • The deadline to nominate March cargo cancellations at Cheniere’s two liquefaction facilities was yesterday, January 20. Few if any cancellations were expected for March (S&P Global)
    • “At the moment I’d say U.S. cancellations are unlikely given the value of TTF,” said a Europe based trader.” “Those cargoes still well in the money.”
    • S&P Platts latest LNG netback analysis predicts U.S. LNG to remain profitable by more than $2 into the third quarter of 2021
    • AEGIS notes that there has been much talk around U.S. LNG facilities running at operable capacity beyond the high demand months of this winter. If the arb is in the money then the cargo should be lifted

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