July 21, 2020

July 21, 2020
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  • WTI is up $1.11 to $41.92/Bbl, and Brent is up $1.21 to $44.49/Bbl
  • Brent crude advances over 2% to four-month high on demand recovery hopes
    • The European Union agreed on an unprecedented stimulus package to pull their economies out of the recession (WSJ)
    • Downside price risk still remains as surges in viral cases cause local elected officials to consider new lockdowns
  • The U.S. is consuming more and more gasoline and diesel as the population emerges from coronavirus lockdowns (Bloomberg)
    • By one measure, more distillate fuel is being used than a year ago. The less volatile four-week rolling average still shows demand still 6.4% below last year.
    • Gasoline has also seen a recovery in demand and was only a few percentage points below a year ago in the week following the July 4 holiday weekend (EIA)
    • Airline passenger throughput in U.S.: -73 y/y%, +27 m/m% (TSA)
    • Commercial flights Worldwide +38 m/m% (FlightRadar24)
  • Natural gas is up 2.0c to $1.661/MMBtu
    • While the final number is uncertain, anywhere from 15 to 26 U.S. LNG cargoes have been cancelled for the month of September (Reuters)
      • The months of July and August had 40-45 U.S. LNG cargoes cancelled, while June had an estimated 20 to 30 cargoes cancelled
      • The TTF, the European gas benchmark, Henry Hub spread does not begin to make economic sense until November of this year given current futures prices
    • Weather models lost approximately five Cooling Degree Days (CDD) over the last twenty-four hours with the end of July forecast now at 413, good enough to be the second hottest July of all time (Commodity Weather Group)
      • The balance of summer strip has lost some $0.24/MMBtu over the last two weeks
    • U.S. State Department authorizes additional sanctions targeting Russian pipelines
      • The State Department said, “If completed, these projects (Nord Stream II) would undermine European security and strengthen Russia’s ability to use its energy resources to coerce our European partners and allies. The projects would hinder the process of European energy diversification.”
      • U.S. Secretary of State Mike Pompeo said the United States will take whatever action is necessary to prevent or prolong the project’s completion, which is estimated to be near 4Q2020 or 1Q2021

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