June 17, 2019

June 17, 2019June 18th, 2019
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  • WTI is down 26c to $52.25/Bbl, and Brent is down 54c to $61.47/Bbl
  • Pressure is building on OPEC+ to extend cuts at their early July meeting in Vienna
    • On Friday, the IEA said global oil supplies would expand far more than demand next year
    • The oil markets bounced off their lows last week after two tankers in the Middle East were attacked, but slipping demand forecast caused mostly by an ongoing trade war keep pressure on prices
  • Iran is close to further escalating tension between the US as Tehran warned Europe it will breach nuclear stockpile cap in 10 days (Bloomberg)
    • Iran’s atomic energy agency said the country would step up the pace of enrichment after that deadline
    • Producing enrichment purity beyond a 3.67% cap was set to prevent it from making weapons-grade uranium
      • Iran has not reached that percentage but indicated that it may do so
  • Oil rigs fell by one to 788, the lowest since early February 2018 (Bloomberg)
    • By state, Texas lost the most, at six, most of which were likely gas-directed rigs
  • Natural gas is down 1.2c to $2.375/MMBtu
  • Waha cash prices have turned negative again on the back of rising natural gas production (9.8 Bcf/d) and continued mild weather
    • It is important to note that when production began to reach these levels back in late May a significant, negative, price drop occurred
    • The continued price depreciation within the region places an increased emphasis on the timely completion of Kinder Morgan’s Gulf Coast Express
  • Early weather models have begun forecasting July weather conditions with initial predictions stating that July should begin to provide some welcomed warmer weather
    • This increase in typical summer weather will be primarily focused along the East Coast
  • Bakken Shale gas production is reaching record levels not seen since 2014, however that has also come at a cost of near record levels of gas flaring due a lack of available capacity in the area
    • Significant investment in processing plants and gathering lines are planned to come online within the next two years in order to relieve supply pressures
  • Baker Hughes gas rig count lost five rigs, to bring the total gas rig count to 181
      • The three major gas basins, Marcellus, Haynesville & Utica, see no change in gas-directed rigs
  • Spot natural gas prices for the five primary East Texas natural gas benchmarks dropped to their lowest levels since November 2016 (Platts)
      • The lower prices can be attributed to very strong storage builds, mild weather – dampened demand, and will not see any relief until the Sur de Texas-Tuxpan gas marine pipeline is filled or LNG trains in the region are brought into full service

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