July 12, 2019

July 12, 2019
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  • WTI is up 10c to $60.30/Bbl, and Brent is up 34c to $66.86/Bbl
  • The International Energy Agency (IEA) says growing US oil output will outpace sluggish global demand and lead to large stocks build around the world in the next month
    • In the its monthly report the IEA said “Market tightness is not an issue for the time being and any rebalancing seems to have moved further into the future”
    • The agency also points out that growing supply presents a major challenge to those who have taken the task of market management, referring to OPEC+
  • As tropical storm Barry passes through major Gulf of Mexico production areas, oil firms have shut more than 1 MMBbl/d, 53% of GOM output
    • The supply disruptions will be temporary, but have taken supply off the market, helping WTI stay near the $60/Bbl level
  • AEGIS recommends caution now that WTI has reached $60/Bbl
    • Crude oil is up nearly $10/Bbl over the last month with help from falling US crude inventories and rising tensions between the US and Iran
  • Natural gas is up 2.9c to $2.445/MMBtu
  • So far 191 production platforms and 7 rigs have been evacuated on account of Tropical Storm Barry, this is up from 15 platforms and 4 rigs the previous day
    • As a result, 1.24 Bcf/d of gas, or 45% of the Gulf of Mexico’s respective production, has been shut in
    • Storm models have Barry missing Texas and, instead, heading up the Mississippi River through Louisiana
  • Barry is doing more than just halting supply in the Gulf
    • Feedgas deliveries to LNG export terminals in the Gulf continue to trend lower as Cheniere’s Sabine Pass terminal is refusing to take incoming vessels
    • Weather conditions are noticeably cooler in the southeast and central portions of the United States, dropping power burn
    • Phillips 66 is shutting down its 250 Mb/d Belle Chasse refinery, while others are keeping close watch on weather updates
  • Storage levels increased last week by 81 Bcf to almost 2.5 Tcf total
    • This build was larger than analyst expectations and marks 3+ months of larger year-on-year builds
    • Inventories for the US are now at a surplus of 275 Bcf to last year and a deficit of 142 Bcf to the five-year average.

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