June 5, 2020

June 5, 2020
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  • WTI is up $1.62 to $39.03/Bbl, and Brent is up $2.04 to $42.04/Bbl
  • Oil is headed for a sixth weekly gain after OPEC+ reached a tentative agreement to extend historic production cuts
    • Brent crude climbed above $40/Bbl, while WTI rose almost 5% to trade just shy of the $40 level
    • Russia and Saudi Arabia reportedly worked out their differences with Iraq, who has been accused of not meeting its original supply-reduction quota
  • OPEC will meet on Saturday at 1 p.m. London time, followed by an OPEC+ meeting two hours later, delegates said (Bloomberg)
    • The record OPEC+ production cuts have helped double Brent’s value
    • An extension of the OPEC+ deal would undoubtedly help clean up some of the oversupply caused by virus induced demand destruction
  •  Oil producers curtail U.S. Gulf operations
    • Norway’s Equinor joined other Gulf producers planning to shut in some Gulf of Mexico operations as tropical storm Cristobal heads towards major oil and gas installations
    • Equinor said it will close operations at its Titan offshore production platform ahead of the storm
    • BP is also ramping down production. The company has begun removing offshore personnel and reducing production at the Thunder Horse, Atlantis and Na Kika platforms (Argus)
    • The U.S. Gulf of Mexico produces just under 2 MMBbl/d, according to the Energy Information Administration
  • Natural gas is up 2.9c to $1.851/MMBtu
  • On Thursday, the EIA announced an injection of 102 Bcf for the week ending May 29, 2020
    • This injection was smaller than the 109-Bcf build reported a week earlier and well below the 118-Bcf build during the corresponding week in 2019
    • Storage now stands 39%, or 762-Bcf above last year’s level of 1.952 Tcf
  • Additional sanctions aimed at thwarting the completion of the mega-pipeline from Russia to Germany, Nord Stream II, have been announced
    • The “Protecting Europe’s Energy Security Act” states that sanctions related to Nord Stream II will apply to all vessels engaged in pipe-laying activities, as well as insurance companies
    • The pipeline is expected to be completed sometime between 4Q2020 through 1Q2021, barring any major setbacks
    • Once the pipeline is completed, U.S. LNG exports to Europe will be at risk of losing market share to Russia’s ultra-cheap gas
  • President Trump to use economic crisis powers to bypass environmental barriers for energy infrastructure
    • These powers use warrants to bypass environmental standards set by government agencies such as the EPA
    • “The need for continued progress in this streamlining effort is all the more acute now, due to the ongoing economic crisis,” Trump said. “Unnecessary regulatory delays will deny our citizens opportunities for jobs and economic security, keeping millions of Americans out of work and hindering our economic recovery from the national emergency.”

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