July 26, 2019

July 26, 2019
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  • WTI is up 43c to $56.45/Bbl, and Brent is up 35c to $63.74/Bbl
  • Oil is on pace for a weekly increase as continued tensions surrounding Iran cause fears of disrupted Middle East supply
    • A large US crude stockpile draw last week is also lending support
    • Iran tested a ballistic missile on Wednesday, according to CNN
  • WTI Midland’s spot discount to WTI at Cushing expanded 20c to -$2.85/Bbl, the weakest level since May 17 (Bloomberg)
    • Bal ’19 WTI Midland has seen the largest drop in the last month when compared to the rest of the strips
      • In early July, the August contract was trading at parity with Cushing, but has slipped to -$0.86 as the market awaits new pipeline builds
  • Natural gas is down 4c to $2.204/MMBtu
  • EQT’s analyst day call on Thursday gave some helpful insight into Appalachian production
    • According to CEO Toby Rice, the vast majority of wells in the region are sub-economic at current strip pricing
      • The current strip, which is around $2.50, is enough to maintain production, but not growth
      • Investors will most likely pressure gas drillers to cut production to maintenance levels
    • EQT also appears confident that, despite delays, the Mountain Valley Pipeline will get constructed
  • OneOK has announced that they will be moving forward with three expansion projects
    • Project 1: 200 MMcf/d expansion of its Bear Creek processing facility in the Williston
      • Processing capacity up to 1.6 bcf/d
    • Project 2: 40,000 bpd expansion to the West Texas LPG pipeline
    • Project 3: 65,000 bpd expansion to its Mid-Continent fractionation plant
  • Natural gas storage rose by 36 Bcf, which was slightly above the 33 Bcf injection analysts were expecting
    • This was the second time during the injection season where a build came in below the 5-year average
    • Total storage is now at 2.57 Tcf, which is a surplus of 300 Bcf compared to last year but at a deficit of 151 Bcf compared to the five-year average

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