January 24, 2020

January 24, 2020
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  • WTI is down 28c to $55.31/Bbl, and Brent is down 36c to $61.68/Bbl
  • Crude oil prices are on their way to the worst run of weekly loses since May
    • The third week of declines comes amid fears that China’s coronavirus will erode fuel demand at the same time markets are forecasted to be well supplied
  • OPEC is discussing whether to extend its oil cuts until the end of 2020 as the market still looks bearish, Russia’s TASS news agency (Reuters)
    • The next official OPEC meeting is set to be held in early March, but could also meet in June to decide on policy, according to an OPEC source talking with the Russian news agency
    • In December, the cartel and its allies deepened cuts from 1.2 MMBbl/d to 1.7 MMBbl/d, but with overcompliance cuts would effectively amount to 2.1 MMBbl/d
  • A drop in U.S. crude inventories surprised analysts on Thursday who were expecting a build
    • Crude stocks fell by 405 MBbl to 428.1 MMBbl, dropping to the lowest level since October, according to the EIA
    • A build in U.S. gasoline inventories were a bearish mark of the overall EIA data release. Gasoline stocks are at an all-time high
    • A drop is distillate stocks helped offset a build in gasoline inventories
  • Natural gas is down 3.7c to $1.889/MMBtu
  • Prompt-month gas prices dropped to $1.88/MMBtu as European weather models removed their first colder-than-normal day from the 11-to-15-day outlook
    • It should be noted, again, that the two-week forecasts have a large spread between the warmest and coldest runs
  • The EIA reported a withdrawal of -92 Bcf, this was slightly larger than the -88 Bcf withdrawal analysts were expecting
    • Storage inventories now stand at 2.95 Tcf, roughly 250 Bcf more than the five-year average
    • Prompt-month gas prices fell immediately following the report as the stronger-than-expected withdrawal was not bullish enough to offset the widespread fundamental weakness in markets
    • Next week’s projected withdrawal is expected to near -200 Bcf, however, this may be too late in the winter season to provide any sustained uplift for prices

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