March 12, 2020

March 12, 2020
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  • WTI is down $2.05 to $30.93/Bbl, and Brent is down $2.19 to $33.60/Bbl
  • Oil prices drop further on Thursday following travel restrictions imposed by Donald Trump
    • Trump addressed the nation last night and announced a ban on flights from Europe (minus the U.K.) to the U.S.
    • The president wasn’t specific on whether the travel ban applied only to humans or cargo as well
    • Global equity markets also took a hit following the announcement. Dow futures were down over 1,200 points on Thursday morning triggering circuit breakers (limit down)
  • The Saudis are unleashing a wave of crude toward Europe, pledging to supply regional refineries with about three times their usual intake from Saudi Arabia (Bloomberg)
    • The added crude, plus deep discounts from the Kingdom, is turning the European oil market into the battle ground between Russia and Saudi Arabia
    • The battle could be long in duration as Russia, like the Saudis, have some of the lowest production costs in the world
  • Natural gas is down 8.9c to $1.789/MMBtu
  • The Commodity Weather Group now forecasts March’s total HDD estimate to be 524 HDDs, this would make it the third warmest March on record
  • Prompt-month Waha has seen a roughly $0.50/MMBtu improvement through Bal ’20 since last Friday
    • The forward curve for Waha in Cal ’21 and Cal ’22 is near NGPL Midcon prices, a theoretical limit, this could provide an opportunity to hedge given recent price movements
  • Analysts estimate a -55 Bcf withdrawal for the week ending March 6, this would be substantially lower than the -164 Bcf withdrawal in the corresponding week last year
    • Withdrawal estimates ranged from a low of -46 Bcf to a high of -72 Bcf
    • A withdrawal within this range would increase the surplus to the five-year average to 220 Bcf and total stocks would stand at 2.036 Tcf

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