July 16, 2019

July 16, 2019
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  • WTI is up 34c to $59.92/Bbl, and Brent is up 23c to $66.71/Bbl
  • There is still about 1.3 MMBbl/d or 69%, of oil production in the GOM that remains shut as operators start returning to platforms that were evacuated, according to the US Bureau of Safety and Environmental Enforcement
    • BSEE said 267 platforms and 10 non-dynamically positioned rigs remain evacuated on Monday
  • The number of Drilled but Uncompleted Wells (DUCs) in major US shale plays fell for a fourth straight month
    • The drop is the longest stretch of declines since 2016, as operators have decreased capex – lowering the amount of well inventory
    • DUCs fell by 41 to 8,248 in June, according to the EIA’s Drilling Productivity Report
      • About half of the DUCS are in the Permian Basin
    • Active rigs in the US hit a recent high of 1,015 in November 2018, just over 100 rigs higher than the current 906 total active rigs
  • Magellan Midstream Partners is planning to expand the 190 MBbl/d Saddlehorn crude pipeline and add a new origin point in Ft Laramie, Wyoming (Argus)
    • The company is holding an open season for 100 MBbl/d of incremental capacity on Saddlehorn
      • The pipeline moves crude from Carr and Platteville in Colorado to Cushing, Oklahoma
  • Natural gas is down 7.7c to $2.331/MMBtu
  • Weather relief for natural gas prices are forecast to all but disappear for the month of July
    • West coast and northeastern markets will most likely have noticeably higher temperatures
    • However, the vast majority of the central and southeastern US looks poised to be hit by a prominent cooling wave
  • In the wake of IMO 2020, SEA/LNG, a non-profit LNG foundation, has found that LNG provides a superior return on investment for tankers compared to scrubbers
    • Low natural gas costs, positive environmental impacts, and decreasing CAPEX for LNG are positioning the fuel source as a viable option post regulation
    • Currently, today’s ships burn more than 3 million barrels of heavy fuel oil a day, leaving a large market open for future LNG consumption
  • Tropical Storm Barry did little to impact demand across the southeast as natural gas consumption fell by roughly 0.5 Bcf/d
    • LNG export terminals along the coast also faced minimal delays and even set another single day feedgas record of 6.4 Bcf/d
    • Power burn levels also appear to have remained strong during the storm

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