June 18, 2019

June 18, 2019
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  • WTI is up 20c to $52.13/Bbl, and Brent is up 1c to $60.95/Bbl
  • The number of DUC wells in major basins fell in May, according to the EIA
    • In the third month of declines, total DUCs now stand at 8,283, down by 77 from April
    • The overall drop in DUC wells in May reflected declines in nearly all basins except the Permian
  • OPEC is now targeting mid-July for the next meeting to discuss oil cut policy
    • Russia and Iran were in disagreement with OPEC on the timing of the meeting, but have since progressed closer to setting an agreed upon date
  • CBOE/Nymex Oil Volatility Index rose to 47.5, highest since Jan. 7 (Bloomberg)
    • WTI 2nd month 25-delta put skew jumped to about 7ppt on Monday
    • Fear of lower demand growth are driving the oil markets
  • Natural gas is down 0.4c to $2.382/MMBtu
  • US LNG feedgas was just shy of all-time high at 5.8 Bcf on Monday (Platts)
    • The roughly 500 MMcf/d gain in feedgas demand Monday, as compared to the first-half June average, comes as new liquefaction trains at Cameron LNG and Corpus Christi edge closer to commercial service
  • After FERC approval in April, Sempra is looking to double capacity at proposed Port Arthur LNG export facility (Platts)
    • Texas, Sempra Energy is seeking to begin the pre-filing process for an expansion that would boost nameplate production capacity to 27 million mt/year in aggregate from 13.5 million mt/year
    • Sempra will not need to acquire any land for the expansion, the real challenge will be entering  into offtake contracts to secure financing  for the project
  • Alliance Pipeline is shutting down for the next four days due to repairs and, with it, displacing 2 Bcf/d of capacity
    • Alliance runs from north west Canada, through North Dakota, into northern Illinois
    • Given record production and flaring numbers coming out of the Bakken, this takeaway capacity disruption may serve to affect upper Midwest basis

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