July 25, 2019

July 25, 2019
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  • WTI is up 84c to $56.72/Bbl, and Brent is up 77c to $63.95/Bbl
  • US crude inventories fell by 10.8 MMBbl to 455 MMBbl last week
    • The massive drop in crude stocks came as production fell due to outages from Hurricane Barry
    • The drop was inline with what the API reported on Tuesday afternoon and the sixth straight week of withdrawals
    • Oil prices did react positively to the large inventory draw, but not as much as one would expect as market participants likely took into account noisy data caused by Hurricane Barry
  • Iran’s President said protecting the Persian Gulf is solely the responsibility of countries in the region and other nations should stay away (CNBC)
    • The response comes after certain European nations backed the UK’s proposal for a European naval force after Iran seized a British ship in the Strait of Hormuz (Aljazeera)
    • Last week, the US deployed military personal to Saudi Arabia to bolster defenses in the region. In addition to troops, the US sent warships and a Patriot missile defense battery to the region
  • Natural gas is up 2.3c to $2.243/MMBtu
  • The EIA is expected to report a 33 Bcf build, which would be below the 5-year average of 44 Bcf
    • Analyst estimates range from 28 Bcf on the bullish side to 44 Bcf on the bearish side
    • Should the injection fall within expectations, this would be the second time this year that the build was below the 5-year average
  • Northeast production has surprisingly grown by 1 Bcf/d despite continued weakness in gas prices and mild weather
    • Given these gains, many analysts are still predicting that natural gas companies operating in the Appalachia will begin to cut future CAPEX guidance (S&P)
    • Excess pipeline capacity could also become scarce in the next year or two as regulatory backlash has significantly delayed many major pipeline developments
  • Last year’s total natural gas demand has recently surpassed total demand for the current year during the month of July

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