July 17, 2020

July 17, 2020
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  • WTI is down 14c to $40.61/Bbl, and Brent is down 21c to $43.16/Bbl
  • West Texas Intermediate (WTI) has continued to trade in a narrow band since the start of June
    • A quick rebound from April brought WTI futures into the $35-$42 range
    • Lately, the U.S. benchmark has traded on the higher end of this range as demand has followed an upward trend globally
  • The overall trend in oil demand is up, however, surges in viral infections are tapping the brakes on pace of the recovery
    • The increases in cases are causing some states and localities to re-institute tighter forms of social distancing, a move that could limit fuel and product use
    • In the week ended July 11, U.S. retail gasoline demand fell 5% from the previous week, according to GasBuddy (Reuters)
    • Demand dropped the week before as well, the first time since March lockdowns that it dropped for two straight weeks
  • China ships crude from swollen storage, and it’s finding its way back into the international market (Bloomberg)
    • Traders move on the opportunity to source cheap crude for resale to regional refiners
    • Back in April, China went on a record buying spree to fill its reserves with low-cost oil supplies, helping create extra demand
    • Now some of those barrels are hitting the market at the same time as OPEC+ prepares to raise output
  • Natural gas is down 1.5c to $1.708/MMBtu
    • The EIA reported an injection of 45-Bcf for the week ending July 10, 2020
      • This injection was below both the 56-Bcf build reported a week earlier and the 67-Bcf build during the corresponding week in 2019
      • Storage now stands 663-Bcf above last year’s level of 2.515 Tcf
      • AEGIS notes this is the third consecutive build below what analysts were expecting. The gas-fired power demand brought on by the scorching weather this month has helped offset some LNG demand losses
    • Cameron LNG request approval from FERC to bring Train 3 in-service
      • The first train at the site was brought in-service in August 2019, with the second train coming on-line on March 2, 2020
      • The Cameron LNG export terminal, located in Hackberry, Louisiana, consists of three trains that will export approximately 1.7 Bcf/d from the site during phase one
    • Pilot LNG filed an application to develop the Galveston LNG Bunker Port
      • This would be the regions first dedicated LNG bunker terminal, a fuel which cuts shipping fuel cost and emission to help vessels comply with IMO 2020
      • Pilot LNG said they expect a final investment decision (FID) in 2H2021, and an in-service date in 2024

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