June 15, 2020

June 15, 2020
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  • WTI is down $1.26 to $35.00/Bbl, and Brent is down 82c to $37.91/Bbl
  • Commodities across the board are lower this morning on fears that a second virus wave will hit the economy
    • Oil futures traded below $35/Bbl overnight in New York
    • Beijing locked down part of the city after virus outbreak at a large fruit and vegetable supply center. China reported its largest daily increase in cases since mid-April with 57 new infections on June 13 (Bloomberg)
  • Active drilling rigs across the U.S. fell for a 13th week to the lowest in more than a decade, according to Baker Hughes
    • Total rigs have slipped to 266, after falling five last week
    • Oil-directed rigs fell by seven to 199 with most of those losses coming from the Permian
    • Rigs seeking oil are now down by 589 from 788 a year ago
  • WTI Midland weakened 5c relative to crude at Cushing, Oklahoma, to a discount of -$0.25 on Friday
    • Friday’s spot settle was the weakest since mid-April.
      • As a reminder clients can access historical and fwd pricing market data on the Flow platform.
    • WTI Midland’s discount to Cushing is concentrated in the cash or spot market, the forwards remain at a premium
  • Natural gas is down 0.5c to $1.726/MMBtu
  • The Commodity Weather Group (CWG) currently forecasts this June to be the hottest of all time, in terms of population-weighted Cooling Degree Days (CDDs), at 287 CDDs
    • The ten-year normal is 264 CDDs and the thirty-year normal is 230 CDDs
    • CWG does note that there are some risks that the forecast could fall into the lower 280s, or even 270s, however that would still place this June in the top-ten warmest of all time
  • Gas directed rigs increased by two last week, bringing the U.S. total to 78 (Baker Hughes)
    • The Marcellus and the Utica both remained unchanged, while the Haynesville rig count increased by two
    • The gas rig count now sits below 50% of the year-ago level of 181

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