January 28, 2020

January 28, 2020
Share
Print Friendly, PDF & Email
  • WTI is up 28c to $53.42/Bbl, and Brent is down 1c to $59.31/Bbl
  • Oil prices take a breather after five-consecutive down sessions, but the China virus continues to spread and the death toll is still rising
    • Production outages in Libya and supportive comments from OPEC have helped lesson a further blow to prices
    • Jet fuel prices in Asia have dropped and profits made by refiners for the product have slumped to the lowest level in more than 2-1/2 years (Reuters)
    • In a note to clients, Barclays said “If air passenger traffic in China declined by half in the first quarter of 2020, it would likely lead to a 300 MBbl/d year-on-year decline in jet-kerosene demand from China”
    • AEGIS notes that the fear of lower demand for product comes amid a backdrop of ample supply
  • Libya’s oil production could be only days from coming to a complete halt, the nation’s top oil official said (Bloomberg)
    • The OPEC nation is currently pumping 262 MBbl/d and could fall as low as 72 MBbl/d in days, NOC Chairman Mustafa Sanalla told Bloomberg
    • Output at 72 MBbl/d would be lowest level since the outing of Muammar Gaddafi
  • Exxon Mobil is planning to accelerate drilling off the coast of Guyana as the prospect holds more oil than previously thought
    • The area known as the Stabroek Block is now believed to hold the equivalent of 8 billion barrels, a 33% increase from the company’s previous estimate (Bloomberg)
    • AEGIS notes that production from Guyana is a component of projected non-OPEC supply growth that is anticipated to outstrip demand this year
  • Natural gas is up 2.7c to $1.929/MMBtu
  • Similar to a few weeks ago, the back half (9-15 day window) of weather models are moderating to normal or colder-than-normal weather conditions
    • Should this colder weather materialize in early February, the market could support gas-prices above the $2.00/MMBtu mark as production appears to be leveling off/slowing and LNG feed gas demand continues to average above 9 Bcf/d
    • The Commodity Weather Group notes that there is still an element of risk to these forecasts as weather runs in the past have quickly reversed
  • Chinese LNG imports are expected to drop 5% year-over-year during January (Bloomberg)
    • This decline follows a four-year run where January imports have increased annually by 33%, on average
    • While China’s drop in demand is an important factor for the global LNG market, it should be noted that roughly 70% of contracts are locked-in under long-term terms

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