June, 26 2020

June 26, 2020
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  • WTI is down 18c to $38.54/Bbl, and Brent is up 4c to $41.09/Bbl
  • Oil set for weekly decline, only the second since April, amid a surge in U.S. coronavirus cases
    • WTI futures in New York have had trouble breaking above $40/Bbl for longer than a day
    • Volatility is likely to remain as global viral cases, especially in the U.S., have grown at record amounts
  • Heavy oil in Canada weakened as Enbridge Line 5 ordered shut (Bloomberg)
    • Western Canadian Select at Hardisty, Alberta, fell 30c in ~15 minutes to a $9.35/Bbl discount to WTI on the news Thursday
    • A Michigan court ordered Enbridge to shut its Line 5 pipeline that crosses between Lakes Michigan and Huron to conduct an in investigation into damage discovered earlier in June
    • The pipeline is an important conduit for crude shipments to Eastern Canadian and Midwest refineries
  • Venezuela’s oil problems deepened after Indian refiners halted imports
    • India’s largest private refinery halted purchases of Venezuelan oil
    • Reliance industries, which runs the biggest refinery in the world and accounted for 25% of Venezuela’s exports last year, has no plans at the moment to make future purchases (Bloomberg)
    • AEGIS notes that Venezuela used to be a sizable oil producer within OPEC at 2.4 MMBbl/d, but the global shunning of the Maduro regime has caused production to slip to about 550 MBbl/d
  • Natural gas is down 3.2c to $1.450/MMBtu
  • The EIA reported a build of 120 Bcf for the week ending June 19, this was significantly larger than the average estimated build of 107 Bcf
    • Current U.S. inventories are now at a surplus of 739 Bcf compared to last year and at a surplus of 466 Bcf compared to the five-year average
    • The 120 Bcf build is the largest reported by the EIA in nearly 14 months
    • Goldman Sachs published a note on Thursday, forecasting storage levels will reach 4.33 Tcf by the end of the summer, above its 4.261 Tcf capacity
  • Following the June 25 prompt-month selloff, NYMEX Henry Hub prices are currently at 25-year lows
    • The selloff was aided by a large 120-Bcf storage build, which implied a lack of recovery in demand
    • Analysts estimate that 40-45 U.S. LNG cargoes could be cancelled for August, extending the pressure on any meaningful demand uptick
    • EQT could also look to bring back some 1.4 Bcf/d in the coming months, further adding to an unfavorable S&D balance

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