June 29, 2020

June 29, 2020
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  • WTI is up 42c to $38.91/Bbl, and Brent is up 30c to $41.32/Bbl
  • West Texas Intermediate briefly traded above $39/Bbl Monday morning after declining by 3.2% last week
    • Oil is higher despite global coronavirus cases passing 10 million and a United Nationals agency reporting the most infections for a single day
    • States in the U.S. including Texas reinstated measures to halt its spread as a surge in infections ripple across the southern and western U.S.
  • China’s large state-owned refiners are in discussions to form a purchasing group to buy crude together, increasing their bargaining power (Bloomberg)
    • To start, the group is set to issue bids for certain Russian and African grades in the spot market, they said. The group represents refiners that import more than 5 MMBbl/d
    • At that volume the group would be the world’s largest crude buyer in theory
  • The U.S. drilling rig count fell by one to 265 this week, the smallest weekly decline since mid-March, according to Baker Hughes
    • The sector has idled 528 rigs in the past 16 weeks as oil prices have fallen
    • U.S. oil rigs fell by one to 188
  • Natural gas is up 8.6c to $1.630/MMBtu
    • Summer gas prices may have more downside-potential than upside (link)
      • The 120-Bcf build reported for the week ending June 19 was the largest reported in nearly 14 months
      • Fundamentals signal a storage crunch may be inevitable if we continue to fill storage at 2019’s pace
    • Cheyenne Connector and Rockies Express Pipeline Cheyenne Hub Project have commenced commercial operations
      • The 70-mile, 36 in. diameter Cheyenne Connector is fully subscribed at 600 MMcf/d, with additional expansion capacity available
      • The REX Cheyenne Hub was modified to allow it to receive natural gas from interconnecting pipelines and to enable bi-directional capability at several existing interconnects
      • The Cheyenne connector will bring additional takeaway capacity to the D-J Basin, while the Rex Cheyenne Hub will allow D-J Producers to load their gas onto the Rex pipeline at Cheyenne hub to access previously inaccessible markets
    • Managed money long positions grew by 28,635 contracts to total 251,374 contracts
      • Managed money short positions fell by 654 contracts to total 281,726 contracts
      • Managed money net positioning now stands at -30,352 contracts compared to -59,641 contracts last week

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