June 1, 2020

June 1, 2020
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  • WTI is down 23c to $35.26/Bbl, and Brent is up 23c to $38.07/Bbl
  • WTI is steady this morning on news that OPEC+ deliberations could result in the producers group announcing a short-extension to large output curbs (Bloomberg)
    • OPEC and its allies are considering bringing their next meeting forward to Thursday, where they will discuss prolonging production curbs by one to three months, according to a delegate
    • Supply reductions by OPEC+ have been effective as crude rallied almost 90% last month, a record gain.
  • There is evidence of a demand rebound in China as oil tankers line-up to dispose of their crude
    • Two dozen or more crude-laden tankers are waiting to discharge at terminals on China’s east coast that supply state-owned and independent refiners in the region, according to shipbrokers and vessel-tracking data (Bloomberg)
    • Demand in May is almost back to levels seen before the coronavirus caused lock-downs
    • Shandong refiners, known as China’s independent refineries, have cranked up run rates to over 75%, up from the February lows of ~43%
  • Natural gas is down 7.3c to $1.776/MMBtu
  • AEGIS notes that U.S. gas prices may still face some headwinds this summer, however most of the downside price risk could already be priced in
    • LNG production will likely remain stifled as the spread between TTF and Henry Hub does not become positive until November
    • The Summer ’20 strip has fallen roughly $0.35/MMBtu, since the start of May, to $1.89/MMBtu
  • The CFTC reported that managed money short positions grew by 7,865 contracts to total 208,854 contracts
    • Managed money long positions also fell by 11,279 contracts to total 201,522 contracts
    • Net positioning has, once again, flipped slightly negative at -7,332 contracts

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