June 9, 2020

June 9, 2020
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  • WTI is down 44c to $37.75/Bbl, and Brent is down 56c to $40.24/Bbl
  • Oil prices are down slightly this morning as the market continues to digest Saudi Arabia’s decision to cease extra voluntary production cuts at the end of the month
    • A stronger dollar and a retreat in equities is also weighing on crude-oil prices this morning
  • Libya’s largest oil field halted again after gunman forced closure (Bloomberg)
    • The Sharara field was stopped after armed men entered the site on Monday and told employees to end activities
    • The setback threatens a revival of exports from Libya, which has produced little oil since January
    • Sharara was set to start producing about 30 MBbl/d, with a full ramp-up in three months to 300 MBbl/d
  • Iraq has asked some Asia refiners to consider forgoing prompt shipments of its Basrah crude, a sign the nation is trying to comply with its OPEC quota
    • The OPEC nation’s marketer SOMO sent request to several customers if they would consider not taking some contracted cargoes for June and July loading, according to people familiar with the matter(Bloomberg)
    • Producers such as Iraq and Nigeria have been coming under increased scrutiny following the latest OPEC+ agreement
  • Natural gas is down 0.8c to $1.781/MMBtu
  • June Population-Weighted Cooling Degree Day forecast continues to improve with the Commodity Weather Group forecasting 280 CDDs, good enough to make it the second hottest June of all time
    • The ten-year normal is 264 CDDs, while the 30-year normal is 230 CDDs
    • AEGIS notes that while weather is looking supportive for the summer, there are still several headwinds including falling LNG demand and the potential for a rebound in gas production
  • Bloomberg forecasts that, given current run rates, Europe could fill up its gas storage by early September
    • Europe is considered the destination market of last resort for LNG cargoes however, given the storage situation, the U.S. could see an uptick in absorbing global LNG supply
    • Despite storage concerns, TTF prices, commonly referred to as the European gas benchmark, have rallied from all-time lows of $1.18/MMBtu back up to $1.74/MMBtu
  • US pipeline exports to Mexico are up 11%, or around 500 MMcf/d from the monthly average in May (Platts)
    • US natural gas exports to Mexico are averaging 5.2 Bcf/d in June
    • The Wahalajara pipeline system should boost West Texas exports to Mexico by as much as 400 MMcf/d once it is brought in-service

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