July 2, 2020

July 2, 2020
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  • WTI is up 42c to $40.24/Bbl, and Brent is up 50c to $42.53/Bbl
  • The August WTI contract held above $40/Bbl Thursday morning as a bigger-than-expected drop in U.S. crude stockpiles outweighed virus fears
    • Sentiment was also aided by a survey showing OPEC output fell to the least since 1991 in June, while Russia reached near total compliance with its quota (Bloomberg)
    • OPEC+ alliance is set to taper its 9.7 MMBbl/d of cutbacks to 7.7 MMBbl/d from August to December, and slow the reductions to 5.7 MMBbl/d until April 2022, according to Bloomberg
  • U.S. crude inventories fell by 7.2 MMBbl to 533.5 MMBbl last week, according to the Energy Information Agency (EIA)
    • The average analyst estimate was much lower at only a 289 MBbl build
    • Crude stocks in the U.S. Strategic Petroleum Reserve (SPR) moved higher by 1.7 MMBbl. The SPR stocks are not included in the overall EIA commercial crude inventory figures
    • Stocks at Cushing, Oklahoma, eased by 260 MBbl to 45.6 MMBbl in an eighth week of withdrawals
  • U.S. Weekly Jobless Claims fell to 1.427 million versus estimates of 1.35 million
    • June jobless rate down to 11.1% versus estimate of 12.5%
  • Natural gas is up 2.1c to $1.692/MMBtu
  • U.S. LNG feedgas demand fell to a twenty-month low yesterday as flows went from 4.4 Bcf to 3.2, according to data from Platts
    • European LNG imports also hit a 16-month low, in June, due to COVID induced demand destruction
    • LNG arbs will likely remain uneconomical until September or October, at the earliest, keeping domestic feedgas demand low while Europe works through its own seasonally-high storage situation
  • Analysts expect a 77-Bcf injection for the week ending June 26 (Platts)
    • This injection would be below the 92-Bcf injection reported in the corresponding week last year, but above the five-year average of 65-Bcf
    • Injection estimates ranged from a low of 66-Bcf to a high of 85-Bcf
    • A withdrawal within expectations would increase the surplus to the five-year average to 478-Bcf with total stocks at 3.089 Tcf

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